PSC filing by Charter

BEFORE THENEW YORK PUBLIC SERVICE COMMISSION

_______________________________________)

Joint Petition of ))

CHARTER COMMUNICATIONS, INC. ))

and ) Case 15-M-0388)

TIME WARNER CABLE INC. ))

For Approval of a Transfer of Control of )Subsidiaries and Franchises; for Approval of )a Pro Forma Reorganization; for Approval of )Assignment of 16 Franchises; and for Approval )of Certain Financing Arrangements )______________________________________ )

REPLY COMMENTS OF CHARTER COMMUNICATIONS, INC.AND TIME WARNER CABLE INC.

Dated: September 30, 2015

Michael R. MooreVice President, Associate GeneralCounsel, Regulatory AffairsCharter Communications, Inc12405 Powerscourt Dr.St. Louis, MO 63131Phone: (314) 543-2414Email: [email protected]

Adam FalkSenior Vice President, State GovernmentAffairsCharter Communications, Inc.1099 New York Ave NWSuite 650Washington DC 20001Phone: (202) 621-1910Email: [email protected]

Luke PlatzerLindsay HarrisonJenner & Block LLP1099 New York Ave., NWWashington, D.C. 20001Phone: (202) 639-6094Email: [email protected]: [email protected]

Christopher HarviePaul AbbottMintz Levin Cohn Ferris Glovsky & Popeo,P.C.701 Pennsylvania Avenue NW #900Washington, DC 20004(202) 434-7300Email: [email protected]: [email protected]

Maureen O. HelmerBarclay Damon, LLP80 State StreetAlbany, NY 12207Phone: (518) 429-4220Email: [email protected]

Counsel for Charter Communications, Inc.

Michael W. QuinnGroup Vice President & Chief RegulatoryCounselTime Warner Cable Inc.13820 Sunrise Valley Dr.Herndon, VA 20171Phone: (703) 713 1735Email: [email protected]

Matthew A. BrillAmanda E. PotterLatham & Watkins LLP555 Eleventh St., NWSuite 1000Washington, DC 20004Phone: (202) 637-2200Email: [email protected]: [email protected]


Counsel for Time Warner Cable Inc.

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TABLE OF CONTENTS

I. THE RECORD DEMONSTRATES THAT THERE ARE SUBSTANTIAL BENEFITSARISING FROM THE TRANSACTION. ......................................................................... 8

A. Video Benefits.................................................................................................................8

1. Conversion of TWC Systems to All-Digital Networks..............................................8

2. New Charter Will Bring Innovative New Products And Services ToIts Video Offering.....................................................................................................9

3. Mobile TV App .......................................................................................................11

4. Increased Diversity of Programming.....................................................................12

B. Voice Benefits..............................................................................................................13

C. Broadband Benefits......................................................................................................14

1. Increased Broadband Speeds with Better Pricing .................................................15

2. Commitment to An Open Internet and Reasonable Usage Polices........................17

3. Low-Cost Broadband Program for Low-Income Customers.................................18

D. Customer Care Benefits ...............................................................................................19

E. Infrastructure and Investment Benefits ........................................................................21

1. Expansion of New Charter Network ......................................................................21

2. Increased Mobile Broadband Capability Through WiFi HotspotDeployment ............................................................................................................23

F. Community Involvement Benefits ...............................................................................24

II. THE CONCERNS RAISED BY COMMENTERS NEITHER WARRANT DENIAL OFTHE TRANSACTION NOR REQUIRE THE IMPOSITION OF BURDENSOMECONDITIONS. ................................................................................................................. 27

A. Infrastructure Deployment and Expansion ..................................................................27

1. Line Extensions and Commercial Area Buildout...................................................27

2. System Upgrades to Increase Broadband Speeds..................................................29

3. The Chatham System..............................................................................................30

4. WiFi Deployment ...................................................................................................31

B. Broadband Affordability and Offerings for Low- and Middle-IncomeCustomers ....................................................................................................................32

C. Debt..............................................................................................................................35

D. Customer Service .........................................................................................................38

E. Jobs ..............................................................................................................................39

F. Other Issues..................................................................................................................42

1. Rate Transparency .................................................................................................42

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2. Coordination with First Responders......................................................................43

3. Commitment to PEG Programming.......................................................................43

4. Maintaining ETC Eligibility ..................................................................................46

III. THE TRANSFER SHOULD BE APPROVED BECAUSE PETITIONERS HAVESHOWN THE TRANSACTION IS IN THE PUBLIC INTEREST ................................ 47

A. Review of Telephone Company Transfers Under PSL Section 100............................47

B. Review of Cable Company Transfers Under Section 222...........................................48

C. Even If Section 70 Did Address the Appropriate Standard of Reviewin Connection with the Transaction, The Utility Net Benefits TestWould Still Be Inapposite............................................................................................53

D. Federal Law Precludes Application of the Utility Net Benefits Test ..........................55

E. Even If the Utility Net Benefits Test Were Applicable, the TransactionWould Satisfy It Without Need for Additional Conditions .........................................56

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BEFORE THENEW YORK PUBLIC SERVICE COMMISSION

______________________________________)

Joint Petition of ))

CHARTER COMMUNICATIONS, INC. ))

and ) Case 15-M-0388)

TIME WARNER CABLE INC. ))

For Approval of a Transfer of Control of )Subsidiaries and Franchises; for Approval of )a Pro Forma Reorganization; for Approval of )Assignment of 16 Franchises; and for Approval )of Certain Financing Arrangements )_______________________________________)


Charter Communications, Inc. (“Charter”), and Time Warner Cable Inc. (“TWC”)

(collectively, “Petitioners”) respectfully submit this reply to comments filed in the above-

captioned proceeding. The Joint Petition filed by Charter and TWC on July 2, 2015 requested

the Commission approve the transfer of control of Time Warner Cable Information Services

(New York), LLC; Time Warner Cable Business LLC; Time Warner Cable Northeast LLC; and

Time Warner Cable New York City LLC (together the “TWC Subsidiaries”) to Charter. The

Joint Petition also sought approval for the pro forma reorganization of Charter, the internal

reassignment of certain Charter franchises, and certain financing arrangements.1

The record in this matter unequivocally shows that the merger of TWC with Charter,

together with Charter’s concomitant acquisition of Bright House Networks (“BHN”) (the

1 Case 15-M-0388, Joint Petition of Charter Communications, Inc. and Time Warner Cable Inc. forApproval of a Transfer of Control of Subsidiaries and Franchises; for Approval of a Pro FormaReorganization; for Approval of Assignment of 16 Franchises; and for Approval of Certain FinancingArrangements, at 1 (Jul. 2, 2015) (“Joint Petition”).

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“Transaction”),2 will deliver substantial public interest benefits to New York residents. Charter’s

plans to invest in and offer high quality services at competitive prices, while improving customer

service, will produce tangible benefits throughout the combined “New Charter” entity’s service

area in New York.3 The benefits of this Transaction include:

• Competing more effectively with large communications companies throughout NewYork and providing enterprise customers with new choices and new service offerings;

• Facilitating the deployment of new technology and advanced infrastructure;

• Investing in U.S. workers to improve the customer experience;

• Building on each company’s commitments to good corporate citizenship, including byexpanding TWC’s commitment to diversity and inclusion and BHN’s initiatives toincrease broadband adoption and close the digital divide;

• Making Charter’s customer- and Online Video Distributor (“OVD”)-friendly broadbandofferings available throughout the Charter/TWC service area footprint in New York andimproving those offerings through additional investment;

• Accelerating investment to achieve all-digital systems in the TWC footprint andcompleting the digitization of these systems within 30 months of closing, resulting inincreased broadband speeds and expanded high definition (“HD”) and video on-demand(“VOD”) programming choices;

• Upgrading Charter’s Chatham system so that subscribers served by that system willreceive the same benefits of all-digital systems that New Charter intends to bring to allother Charter and TWC customers in the State;

2 While Petitioners use the term “Transaction” to refer to the merger of TWC with Charter together withCharter’s acquisition of BHN, requests by Petitioners for approval of the Transaction denote a request thatthe Commission approve, pursuant to §§ 99, 100, 101 and 222, the transfers of the TWC Subsidiaries –and attendant financing arrangements – described in the Joint Petition, as well as the pro formareorganization of Charter and the internal reassignment of 16 Charter franchises described therein.3 Certain of the subjects and benefits discussed in this filing pertain to non-jurisdictional products andservices. While those items are included herein in order to provide a comprehensive view of the publicinterest benefits of the proposed Transaction, Petitioners respectfully reserve all rights relating to theinclusion of or reference to such information, including without limitation their legal and equitable rightsrelating to jurisdiction, filing, disclosure, relevancy, due process, review, and appeal. The inclusion of orreference to non-jurisdictional information may not be construed as a waiver of any rights or objectionsotherwise available to Petitioners in this or any other proceeding, and may not be deemed an admission ofrelevancy, materiality, or admissibility generally or with specific regard to the Commission’s actualpublic interest standard under applicable law.

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• Enhancing the value of broadband offerings available to many existing TWC customersby offering faster base broadband speeds at lower prices than comparable offerings fromTWC throughout Upstate New York, and without imposing separate, additional chargeslike modem fees; and

• Continuing Charter’s open Internet policies, including not blocking or throttling Internettraffic or engaging in paid prioritization.

The Transaction will benefit New Yorkers by expanding the scale and scope of Charter’s

growth-oriented investment strategy, subscriber-friendly pricing, packaging and practices, and

focus on improving customer care and delivering highly valued services – all without creating

any adverse effects on competition.

To obtain approval under the Public Service Law, the Transaction must be shown to be in

the public interest. Petitioners have shown that the Transaction will generate substantial benefits

for consumers by making Charter’s diverse service offerings, customer-friendly practices, and

advanced features and capabilities available to them over the networks operated by New

Charter.4 In addition, the Transaction also will have benefits for enterprise and business

customers, for investment and innovation across all services, and for employment and

community services in the markets New Charter will serve. These benefits will represent

hundreds of millions of dollars of investment, innovation and value for New York residents

served by New Charter’s footprint.

Notably, significant stakeholders, including municipalities and organizations that are

impacted by the innovative programs and services provided by the Petitioners, filed comments in

this proceeding supporting Petitioners’ request for approval of the Transaction, echoing the view

that the deal will provide substantial benefits to the public. Notably, no party or individual that

filed comments has offered a credible basis for concluding that Charter does not possess the

4 Joint Petition at 23-34.

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requisite legal, financial and technical ability to operate the Time Warner Cable systems in New

York in a safe and reliable manner.

The diverse range of organizations and parties from around the State filing in support of

the Transaction highlight the breadth and variety of the benefits associated with the proposed

merger. 5

• The Rochester Business Alliance notes that the Charter, TWC, and BHN“combination offers attractive benefits to business and residential consumers, as wellas creating much-needed jobs for the region,” and that “expanded coverage, lowercosts, job creation and improved service are why we believe this merger will be goodfor Rochester and the Finger Lakes Region.”6

• The Business Council of New York State, Inc. (“Business Council”), whose membersemploy more than 1.2 million New York residents, states that New Charter “willdeliver superior communications services to residential customers in its service area”and “boost job growth in construction and downstream employment.”7

• Girls Incorporated of the Greater Capital Region states that New Charter would“contribute new benefits to our organization and our community through an expanded

5 Parties from New York submitting written comments or testimony to the Commission or the FCC insupport of the Transaction include the Adirondack Regional Chamber of Commerce; AdvancedCommunications Law & Policy Institute at New York Law School; Ali Forney Center; Amber CharterSchool – East Harlem; Cheektowaga Chamber of Commerce; Amherst Chamber of Commerce; BallstonSpa Central School District; Black Rock Forest Consortium; Brooklyn Chamber of Commerce; BuffaloNiagara Partnership; Business Council of New York State; Capital Region Chamber; CenterState Corp.for Economic Opportunity; Cohoes City Council President Ralph Signoracci; Community Association ofProgressive Dominicans; Digital Divide Partners; Dominican Women’s Development Center; DutchessCounty Executive, Marcus Molinaro; Girls Incorporated of the Greater Capital Region; Greater NewYork Chamber of Commerce; Greater Ridgewood Youth Council, Inc.; Manhattan Chamber ofCommerce; Mohawk Valley Economic Development Growth Enterprises Corporation; Museum ofScience and Innovation; Museum of the Moving Image; New York City Hispanic Chamber ofCommerce; New York State Snowmobile Association; Niagara USA Chamber of Commerce; NorthernManhattan Arts Alliance; Olympusat, Inc.; Orange County Chamber; Partnership for NYC; QueensPublic Television; Randall T. Douglas, Town of Jay Supervisor/Essex County Board of Supervisor’sChairman; Regional Food Bank of Northeastern New York; Rev. Jacques Andre DeGraff, One HundredBlack Men, Inc.; Rochester Business Alliance; Salvadori Center; The Retail Council of New York State;Tompkins County Chamber of Commerce; Town Supervisor, Town of Poestenkill; Ulster CountyChamber of Commerce; and the Yates County Chamber of Commerce.6 Comments of the Rochester Business Alliance (“Rochester Business Comments”) at 1 (Jul. 13, 2015).All comments referenced herein were filed in this Docket 15-M-0388, unless otherwise noted.7 Comments of The Business Council of New York State, Inc. (“Business Council Comments”) at 2 (Jul.24, 2015).

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national reach and a renewed commitment to local programs” and that it is“particularly impressed with” New Charter’s “commitment to low-incomeconsumers.”8

• The Amherst Chamber of Commerce avers that the Transaction “would provide ourmembers with better products at lower rates than what is currently offered in ourmarket.”9

• The Black Rock Forest Consortium, which offers nature and science programs tothousands of urban youths each year, enthusiastically supports the merger, stating thatNew Charter “will serve as a prominent community partner in New York.”10

• The Partnership for New York City, which represents New York City’s largestprivate sector employers, investors and leading entrepreneurs, states that theTransaction “will accelerate development of needed broadband infrastructure in NewYork” and give New Yorkers “faster, more reliable broadband connection[s]” that“will spur job creation.”11

• The Advanced Communications Law and Policy Institute (“ACLP”) at New YorkLaw School notes that the unique benefits of the Transaction “constitute a compellingvalue proposition for approving the merger” and that “approval will trigger newinvestment, the deployment of new services, the creation of new jobs, and theemergence of new opportunities for consumers to reap the benefits of more advancedservices.”12

• The Manhattan Chamber of Commerce, representing more than 10,000 members,supports the Transaction because it “would provide the diverse Manhattan businesscommunity with a variety of flexible services and flat rate pricing” and New Charterwill “benefit all business that utilize technology.”13

In addition, a key provider of over-the-top programming video, as well as a variety of

community groups and diversity programmers, have filed comments with the Federal

Communications Commission (“FCC”) and the Commission in support of the Transaction:

8 Comments of Girls Inc. of the Greater Capital Region (“Girls Inc. Comments”) at 1 (Sep. 16, 2015).9 Comments of the Amherst Chamber of Commerce (“Amherst Chamber Comments”) at 1 (Aug. 17,2015).10 Comments of Black Rock Forest Consortium (“Black Rock Forest Comments”) at 1 (Sep. 17, 2015).11 Comments of the Partnership for New York City (“Partnership Comments”) at 1 (Sep. 21, 2015).12 Comments of the Advanced Communications Law & Policy Institute, New York Law School (“ACLPComments”) at 2 (Sep. 10, 2015).13 Comments of the Manhattan Chamber of Commerce (“Manhattan Chamber Comments”) at 1 (Sep. 21,2015).

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• Netflix, which strongly opposed the proposed Comcast/TWC merger last year,supports the Transaction because of Charter’s “welcome and significant departurefrom the efforts of some ISPs to collect tolls on the Internet,” which New Charter willcontinue after the close of the Transaction.14

• The New York City Hispanic Chamber of Commerce supports the Transactionbecause New Charter will “adopt and expand [TWC’s] award-winning diversity andinclusion initiatives” and notes that if the deal is approved, New Charter would offer“diverse programming [that] would benefit many in the Hispanic Community.”15

• Reverend Jacques Andre DeGraff, a leading advocate in the African Americancommunity who works with One Hundred Black Men, Inc., notes that New Charter’sproposed discounted, low-income broadband program “would be a huge relief formany individuals who have long been priced out of the market” for such services.16

• Olympusat, Inc., an independent owner and distributor of Spanish language networksand programming, credits Charter’s commitment to offering programming of interestto Hispanic audiences and notes that New Charter will continue to serve minorityconsumers well by expanding this commitment to TWC and BHN territories.17

The comments submitted by the Department of Public Service staff (“Staff”) also

acknowledge the potential benefits of the Transaction for New York residents and businesses,18

while setting forth some recommendations for additional commitments.19 Likewise, a handful of

other commenters also proffer suggestions for additional public interest guarantees. While

Charter recognizes that a transaction of this sort inevitably will give rise to questions about its

effect on consumers, competition, and the communities served by the merging parties, the impact

of the deal will be a net positive in each of these areas. Charter is certainly committed to

14 Ex Parte Letter from Christopher D. Libertelli to Marlene Dortch (“Netflix Ex Parte Letter”) at 1, FCCMB Docket No. 15-149 (Jul. 15, 2015) (avail. athttp://apps.fcc.gov/ecfs/document/view?id=60001115480).15 Letter from Nick Lugo to FCC Chairman Tom Wheeler (“Hispanic Chamber Comments”) at 1, FCCMB Docket No. 15-149. A copy of this letter is attached to these reply comments.16 Letter from Rev. Jacques Andre DeGraff to FCC Chairman Tom Wheeler (“DeGraff Comments”) at 1,FCC MB Docket No. 15-149. A copy of this letter is attached to these reply comments.17 Comments of Olympusat, Inc. (“Olympusat Comments”) at 1-2 (Sep. 2, 2105).18 Comments of the New York State Department of Public Service Staff (“Staff Comments”) at 24-35(Sep. 16, 2015).19 Id. at 48-60.

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working in a constructive and cooperative fashion with the Commission and its staff to address

any concerns that it may have, as well as concerns raised herein by other parties.

Upon approval of the Transaction, New Yorkers can expect increased technological

capabilities, faster and more widely available Internet service, a robust commitment to customer

service and community initiatives, and enhanced competition for communications services in the

enterprise market. Charter has committed to convert Time Warner Cable’s systems in Upstate

New York to all-digital within 30 months of the close of the Transaction, and the result of this

investment will be to raise TWC’s base broadband speeds to 60 Mbps, which is faster than

TWC’s current highest speed offering in those areas. The Transaction does not result in any loss

of competition in the multichannel video programming distribution (MVPD) marketplace, and

Charter’s customer-friendly broadband practices and net neutrality commitments will benefit

burgeoning over-the-top (OTT) video platforms. New Charter will be led by an experienced

management team with a solid track record of investment and innovation, thereby ensuring that

the merged entity will possess the legal, technical and financial ability to operate the acquired

systems in a manner that meets the public interest. Accordingly, under the Commission’s

traditional and well-established principles for assessing transactions in competitive markets such

as communications, the proposed Transaction satisfies the public interest.20 Petitioners

respectfully request that the Commission approve the Transaction.

20 As set forth below in Section III, while Charter recognizes that the standard for assessing thistransaction under New York law is whether or not it meets the public interest, neither State nor Federallaw support Staff’s contention that the amendments to Section 222 of the Public Service Law weredesigned to establish the utility-based “net benefits test” as the formula for determining whether – andhow – a merger of cable television companies satisfies the public interest. See infra at Section III.

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I. THE RECORD DEMONSTRATES THAT THERE ARE SUBSTANTIALBENEFITS ARISING FROM THE TRANSACTION.

A. Video Benefits

The Transaction will generate substantial benefits for New York consumers of video

services, creating a number of public interest benefits for video subscribers in New York. These

benefits include the conversion of TWC systems to all-digital networks on an accelerated

timetable, the introduction of a number of innovative new product offerings, and increasing

opportunities for customers to take their video programming with them to view on their own

schedules and on a variety of smart devices. The video benefits afforded by the Transaction are

the product of substantial investment, and will provide concrete improvements to the customer

experience and the breadth, quality, and diversity of services and capabilities available to New

York subscribers.

1. Conversion of TWC Systems to All-Digital Networks.

As Staff recognizes, upgrading to all-digital networks frees up bandwidth for additional

services and faster Internet speeds.21 Charter agrees, based on its own experience moving to an

all-digital platform across almost its entire existing service footprint. Digitization will have a

tangible positive impact on TWC broadband and video customers, as New Charter will be able to

provide faster broadband speeds and significantly more high definition and on-demand channels

with better quality and reliability. Conversion to an all-digital platform improves network

monitoring capabilities and provides an opportunity to help prevent or minimize service

disruptions. Conversion of systems to all-digital also allows for the deployment of a superior

set-top box communications protocol – D OCSIS Set-top Gateway (“DSG”) – and improved

communications between the set-top box and the support infrastructure. DSG provides each set-

21 Staff Comments at 28.

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top with the capability to deliver statistical information that enables Charter to proactively

monitor network issues before they become noticeable by customers.

TWC’s systems are all-digital within New York City and a small part of Westchester

County, but not the rest of the State. While prior to the Transaction TWC may have stated a

general intention to eventually upgrade its systems to all-digital, it has yet to do so in Upstate

New York and has not provided a timetable for completing the conversion.22 Meanwhile instead,

Charter has transitioned virtually all of its customers to all-digital networks, and New Charter

has committed to doing the same for current TWC subscribers within 30-months of the close of

the Transaction. Charter’s 30-month commitment to convert the TWC systems to all-digital

therefore represents a significant public interest benefit to New York residents and businesses, 23

and will also come with capital investment in infrastructure, which amounts to a further public

interest benefit to the State’s economy as a whole. 24

2. New Charter Will Bring Innovative New Products And Services To ItsVideo Offering.

Charter is a leader in the creation of new video technology, another concrete benefit New

Yorkers will experience from the Transaction. Charter’s innovative, on-screen Spectrum Guide

offers a customizable interactive experience that allows customers to find video content more

easily across cable TV and on-demand channels. New Charter has committed to deploying the

22 Id. at 28.23 Thus, Staff’s suggestion that the increased broadband speeds that will result from this transactioncannot “truly be considered a benefit” unless Petitioners show that such increases will occur on a fastertimeframe than TWC would have attained on its own is misplaced. See Staff Comments at 28. As Staffacknowledges, TWC never provided a timetable, and the bulk of its Upstate systems have not beenconverted. By contrast, Charter has a track record of completing a company-wide conversion to all-digital, and has provided a specific timetable here. The certainty provided by Charter – in terms ofcompletion of the conversion and the timetable for doing it – is clearly a benefit over the status quo.24 As noted in the Joint Petition, it is possible that systems serving fewer than 1% of homes may not betaken all-digital due to the challenges in interconnecting to the remaining New Charter network, JointPetition at n. 8, but Charter does not believe that any of those areas will be in New York State.

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Spectrum Guide quickly across its merged markets, including within the New York communities

currently served by TWC.

Because the Spectrum Guide uses cloud-based technology, it is compatible with

customers’ existing two-way set-top boxes. In other words, customers can enjoy the benefit of

the innovative Spectrum Guide without going through the time and expense of replacing their

current equipment. Further, an application version of Spectrum Guide will soon be able to work

with innovative third-party retail devices such as Roku.

Upon completion of the conversion of acquired TWC systems to an all-digital format,

New Charter will also begin to deploy its new Worldbox customer premise equipment system.

This will enhance the customer experience by providing new and improved set-top box

capabilities. In addition, Worldbox utilizes a downloadable conditional access system and digital

rights management platform, which will enable New Charter to source set-top boxes at a lower

cost from virtually any manufacturer.

Staff acknowledges that the Spectrum Guide and Worldbox will benefit New York

subscribers.25 While expressing some concern that these initiatives might result in increased

costs to consumers,26 Staff offers no evidentiary support for reaching such a conclusion. To the

contrary, the Spectrum Guide will be furnished as an enhancement to TWC customers’ existing

service, without any incremental charge. Indeed, the Spectrum Guide is a benefit designed to be

compatible with existing set-top boxes and other consumer premises equipment, such as Roku,

thereby enabling customers to avoid the cost and hassle associated with obtaining new

equipment in order to receive advanced network features. As the Business Council notes,

“[e]xisting [TWC] customers, including local businesses, would also benefit from hassle-free

25 Staff Comments at 26-27.26 Id. at 26.

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updates to digitization, Charter’s cloud-based guide and its Worldbox CPE system set-top

box.”27

With respect to the Worldbox, a key purpose behind the product’s design is to enable

New Charter to pick from a wider variety of set-top box manufacturers—creating a more

competitive market for the boxes that should reduce the company’s set-top box costs, not

increase them. Furthermore, Worldbox is designed to comply with the Environmental Protection

Agency’s ENERGY STAR 3.0 efficiency levels, which will help contribute to annual residential

electricity savings. In addition, the downloadable security solutions available with the Worldbox

can give customers a greater degree of flexibility to take their equipment with them when they

move. The downloadable security solution also supports the development of devices

manufactured by third parties and available for retail purchase by subscribers, thereby potentially

further expanding their options for set-top devices.

3. Mobile TV App

After the Transaction, New Charter will expand the capabilities of customers to watch

video programming when and where they want, a significant added benefit to those customers.

The merged company will deploy an advanced mobile video application that combines the best

features and functionality of each company’s existing apps. This new app will combine the

Spectrum Guide user interface (described above) and Charter’s existing on-demand and

“download-to-go” functionality with the nearly 300 live channels currently available currently

through TWC’s mobile application. Thus, customers in current Charter areas in New York will

enjoy far more channels, while customers in TWC areas in the State will benefit from a more

user-friendly and interoperable interface.

27 Business Council Comments at 1.

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4. Increased Diversity of Programming

Charter offers a wide range of video services. In most of its service areas, where Charter

has transitioned to a digital network, the company has grown its HD channel line-up from fewer

than 70 channels in 2011 to a present selection of over 200 and has grown its VOD library to

thousands of choices. In Upstate New York, where TWC is not all-digital, customers enjoy far

fewer programming choices. Charter is committed to ensuring customers have access to

independent and diverse programming. Charter offers its customers access to more than 100

minority focused networks including BET, Bounce TV, TV One, Nuvo, El Ray and Fuse. (TV

One is carried on Charter’s most widely subscribed tier.)

Charter provides one of the most robust Spanish language program offerings in the

industry, with approximately 70 Spanish speaking channels in its “Latino View” package.

Olympusat, Inc., one of the largest independent owners and distributors of Spanish language

networks and programming, notes that Charter has taken the lead in the video industry with

respect to offering programming of interest to Hispanic audiences.28 This includes the fact that

Charter is one of just two large MVPDs that make Spanish language HD programming available

to consumers.29 New Charter will continue Charter’s strong commitment to ensuring that

customers have access to independent and diverse programming, including “the largest tier of

Hispanic channels on the market.”30 New Charter will offer this same Spanish language and

other diverse programming throughout its entire service territory. This commitment represents a

28 Olympusat Comments at 1-2.29 Id. at 2. The Hispanic Leadership Alliance has echoed Olympusat’s views, noting Charter’scommitment to serving “underserved and diverse communities” in comments to the FCC supporting theTransaction. Comments of Hispanic Leadership Alliance, MB Docket No. 15-149 (Aug. 28, 2015) (avail.at http://apps.fcc.gov/ecfs/document/view?id=60001124016)/.30 Comments of the Community Association of Progressive Dominicans at 1 (Sep. 21, 2015).

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significant public benefit in New York, a State with vibrant, diverse communities with wide-

ranging programming interests.

B. Voice Benefits

The record unequivocally demonstrates that the Transaction will benefit the voice

services market for New Yorkers by conferring measureable benefits on voice telephony

customers, particularly in the enterprise market. Neither Staff nor any other commenter has

disputed or questioned Petitioners’ assertion that the Transaction will allow the companies to

integrate the best features of their respective voice offerings, resulting in improved service for

residential and business customers.

Charter provides voice service to over 2.4 million residential customers via Voice over

Internet Protocol (VoIP) technology. The company’s voice services include offering unlimited

long distance calling in the United States and to other countries and territories, as well as features

such as voicemail, call waiting, caller ID, call forwarding and more at no additional charge. For

customers with video service, caller ID on the TV is available in most areas for free.

Charter also offers a wide range of voice and data services to businesses, including

traditional telephony and VoIP products, wholesale data delivery over the last mile, and Metro

Ethernet. As a result of the Transaction, New Charter will incorporate TWC’s high-capacity

transmission and cell tower backhaul services, along with hosting and cloud services provided

through TWC’s NaviSite offerings. Also, by combining existing Charter, TWC, and BHN

service areas, New Charter will provide a competitive nationwide service option that is

particularly beneficial for regional and national businesses, which will face fewer gaps in

coverage areas.

The Transaction will be seamless for customers. As Staff recognizes, customers will

benefit from “retain[ing] the same digital phone number they had with” TWC and keeping the

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“same billing account information.”31 Further, Petitioners are “not seeking authority for the

transfer of customers or for any changes in rates, terms or conditions of service” at this time.32

Importantly, Staff agrees that “[t]here appears to be little danger of the increased exercise

of market power in this case and therefore no detriment exists” in regard to impact on

competition.33 TWC and Charter do not compete directly with one another in New York because

there is virtually no overlap of their service areas. Post-Transaction, residential and business

customers will therefore continue to have numerous competitive alternatives for telephone

service and high-capacity business services, such as Incumbent Local Exchange Carriers

(“ILECs”) and Competitive Local Exchange Carriers (“CLECs”), providers of fixed and

nomadic VoIP services (including Vonage and many others), and wireless providers. One

commenter has noted the addition of “much needed competition in the commercial sector” as a

benefit of the Transaction, thereby potentially “lowering business costs in New York.”34

Accordingly, in the voice services market, the Transaction presents numerous concrete

improvements and benefits – with no downsides.

C. Broadband Benefits35

New York residents will reap significant benefits from New Charter’s commitments to

deploying faster base broadband services for residential and small business customers – without

separate, additional modem fees – and expanding Charter’s existing consumer-friendly terms to

TWC customers. New Charter will also build upon and expand BHN’s low-income broadband

31 Staff Comments at 34.32 Id. at 34.33 Id. at 47.34 Comments of Buffalo Niagara Partnership (“Buffalo Niagara Comment”) at 1 (Jul. 21, 2015).35 Discussion of non-jurisdictional products and services in this section is not intended as a waiver orconcession of the Commission’s jurisdiction beyond the scope of the Petitioners’ regulatedtelecommunications and cable video services. See supra note 3.

15

program and offer it throughout its entire service footprint, including in New York. These

initiatives – made possible by virtue of the Transaction – will confer considerable public benefits

on residents and businesses throughout New York.

1. Increased Broadband Speeds with Better Pricing

Charter’s network investments over the past three-and-a-half years have enabled it to

offer base download speeds of 60 Mbps as the minimum speeds it sells in almost all service

areas. This represents a 10 Mbps increase over the base speeds TWC offers in areas where Maxx

service is available (i.e., the New York City area), and a fourfold increase from TWC’s standard

speeds throughout the remainder of the state. The Amherst Chamber of Commerce notes that the

price of Charter’s 60 Mbps offering “is among the lowest in the industry despite being the

fastest” base speed available.36 Charter’s exceptionally fast base broadband speeds allows

several people in a household to stream HD video, while others are surfing the web at the same

time, a benefit recognized by the Business Council.37 In addition, New Charter will continue to

support TWC’s higher tier speeds of up to 300 Mbps in Maxx markets, including TWC’s New

York City service area.

Multiple commenters have noted that “New Charter’s slowest broadband tier would be 60

Mbps, still less expensive than TWC’s current base tier package.”38 Indeed, Charter’s price for

its 60 Mbps base tier of high-speed Internet is substantially lower than TWC’s comparable

36 Amherst Chamber of Commerce Comments at 1.37 Business Council Comments at 1 (“[Charter’s] slowest broadband tier of 60 Mbps would be cheaperthan comparable offerings from [TWC], allowing several people in the same house to stream high-definition video at the same time.”).38 Comments of Capital Region Chamber (“Capital Chamber Comments”) at (Jul. 29, 2015); see alsoComments of Tompkins County Chamber of Commerce (“Tompkins Chamber Comments”) at 1 (Sep. 14,2015) (“New Charter has also indicated that they will offer their slowest broadband tier of 60 Mbps toTime Warner's current customers at a better price than Time Warner's current basement offering”);Adirondack Regional Chamber of Commerce Comment (“Adirondack Chamber Comments”) at 1 (Jul.21, 2015) (stating same).

16

offerings throughout Upstate New York, which is illustrated below, taken from TWC’s published

rates cards for systems in and around Albany, Rochester, Syracuse and Buffalo. 39

Service Speed Standard CostTWC Standard 15 Mbps $57.99 per month plus $8.00 modem feeTWC Top Speed 50 Mbps $107.99 per month plus $8.00 modem feeCharter Standard 60 Mbps $59.99 per month with no modem fee

The TWC 50 Mbps service with a modem lease is almost double the cost of Charter’s 60

Mbps offering. Further, after layering in additional taxes and fees that are not included in

Charter’s standard offering, the final cost to the consumer may be even higher. Customers

taking the most closely comparable Upstate New York broadband offering from TWC compared

to Charter’s pricing for a service that is 10 Mbps faster can save more than $650 per year. Given

that there are more than one million TWC broadband subscribers in Upstate New York,

customers have the potential to get faster service and save hundreds of millions of dollars per

year. Further, even in Maxx areas where TWC offers a 50 Mbps base offering for $57.99 plus an

$8 monthly modem fee, the standard Charter 60 Mbps service is faster and less expensive for

customers that lease their modems. The Partnership for New York City touts New Charter’s plan

to make “the fastest entry level bandwidth speed available at a low cost” as an important benefit

for New Yorkers.40 Moreover, by eliminating TWC’s $8.00 per month cable modem rental fee,

New Charter will save TWC broadband subscribers throughout the State tens of millions of

dollars annually.

39 See Petitioners’ Response to Discovery Request DPS-8, Exhibit 8 (TWC rate cards).40 Partnership Comments at 1.

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2. Commitment to An Open Internet and Reasonable Usage Polices.

New Charter has promised to abide by the strongest net neutrality protections in the

industry.41 Charter has long practiced network neutrality and has never blocked or slowed down

connection speeds to streaming services. It has also consistently invested in interconnection

capacity to avoid network congestion. New Charter will continue these commitments after the

Transaction closes. The Digital Divide Partnership, which works to bring digital equity to

underserved communities in New York City, notes that “New Charter’s commitment to

settlement-free peering and open interconnection is refreshing and to be applauded.”42 While

some commenters suggest that Petitioners might have “a willingness to sacrifice net neutrality in

order to squeeze additional payment out of content providers, such as Netflix,”43 that concern is

unfounded here due to the commitments already made by Charter. Indeed, Netflix, which

opposed the Comcast-TWC merger due to concerns about network management and

interconnection policies, publicly supports this Transaction.44

New Charter’s broadband offerings will come without any data caps, usage-based

pricing, early termination fees or separate, additional modem fees. Several commenters have

acknowledged New Charter’s commitment to retaining these usage policies, such as Charter’s

policy of imposing “no modem and early termination fees [and] no extra charges for heavy

Internet usage” as a significant benefit for New York businesses and residents.45

41 See Joint Petition at 32-33.42 Testimony of Digital Divide Partnership at 2 (Sept. 21, 2015).43 Comments of City of New York Comptroller Scott M. Stringer (“Comptroller Comments”) at 7 (Sep.21, 2015).44 See Netflix Ex Parte Letter at 1.45 Buffalo Niagara Comments at 1; see also Rochester Business Comments at 1 (identifying“[s]traightforward, nationally uniform pricing with no data caps, no usage-based pricing, no modem fees,no early termination fees, and no federal or state Universal Service Fund (USF) fees” as a benefit forbusinesses and residential consumers); Comments of Retail Council of New York State (“Retail Council

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3. Low-Cost Broadband Program for Low-Income Customers

Petitioners have committed that New Charter will introduce, within six months after the

Transaction closes, a new low-cost broadband service offered to low-income residents that builds

upon BHN’s successful Connect2Compete program. New Charter will enhance the speed of and

expand the eligibility for the broadband service and make it available within three years of

closing across the entire merged entity’s footprint. This program will provide a robust

broadband offering to eligible households at a significantly reduced rate, enabling many more

families and children access to the tools they need to succeed in today’s digital world. Given

that neither Charter nor TWC have a comparable offering today, this is a significant public

interest benefit to customers and responds to the interests of many commenters that want to see

efforts to make broadband more affordable to economically disadvantaged households.

BHN currently offers its Connect2Commpete program to families with children who

receive free or reduced-price meals through the National School Lunch Program. During the

2013-2014 school year, more than 1.2 million students in New York schools received free or

reduced-price lunches through this program.46 Thus, even if New Charter were to do no more

than retain BHN’s existing eligibility criteria (and Charter intends to expand those criteria), the

program would create a new and previously unavailable benefit for hundreds of thousands of

New York State families valued at [tens of] millions of dollars annually.

Numerous commenters agree that such a program will provide a significant benefit to

New York residents. Girls, Inc. of the Greater Capital Region, an organization that works with

low-income families, states that it is “particularly pleased by New Charter’s plans to reach out to

Comments) at 1 (Jul. 23, 2015) (“[i]n addition. New Charter is dedicated to network neutrality and willnot charge customers based on data usage”).46 See http://frac.org/wp-content/uploads/2010/07/ny.pdf.

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underserved communities.”47 Similarly, the Executive Director of the Amber Charter School of

East Harlem, the first Latino-led charter school in the State, states that the New Charter proposed

low-income broadband program would make a “critical connection for children whose learning

would benefit from having online access at home.”48 ACLP states that this “kind of program is

essential to addressing perhaps the most vexing technology challenge facing stakeholders in New

York state: ensuring that as many people as possible have equal opportunity to benefit from the

universe of service enabled by a high-speed Internet connection.”49 The Museum of Innovation

& Science (miSci) in Schenectady has told the FCC that New Charter’s proposed low-income

broadband program will “allow students of all backgrounds to take advantage of advanced

technology and learn more about science and innovation.”50

D. Customer Care Benefits

New Charter is committed to increasing its customer care capacity, and will do so

through investment and in-sourced jobs in the United States. New Charter will bring thousands

of overseas jobs back to the United States, adding thousands of employees to the American

economy. New Charter will bring many of these jobs in-house, where it will provide significant

training, benefits, and opportunities for advancement, adding to the skill level and economic

fabric of local communities, while developing its own highly skilled, well-paid workforce

devoted to delivering improved customer service across the country, including in New York.

Charter already has a track record of creating jobs. For instance, since 2012 Charter has

added more than 7,000 new jobs—representing an increase of 43 percent in the company’s entire

47 Girls, Inc. Comments at 1.48 Comments of Amber Charter School (“Amber School Comments”) at 1 (Sep. 22, 2015).49 ACLP Comments at 2.50 Comments of the Museum of Innovation and Science at 1, MB Docket No. 15-149 (Sep. 15, 2015)(avail. at http://apps.fcc.gov/ecfs/document/view?id=60001324079).

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workforce. Most of those jobs have been in the customer service fields. Charter has already

brought overseas jobs back home and opened new customer call centers, bringing the number of

customer call centers to 11 across the United States. Charter believes these in-sourced workers

are better trained, better equipped, and more properly incentivized to maximize performance.

New York businesses can expect more “streamlined assistance” as a result of having call center

workers based domestically.51

Staff contends that “New Charter will inevitably have less of a focus on New York” and

thus may seek to reduce its New York employee totals from TWC’s current levels.52 However,

Charter currently has only a minimal workforce in New York and would need many TWC

employees to service New Charter’s customers across the State. Given that New Charter will be

bringing jobs back from overseas and in-sourcing more employment, and that some of these jobs

will almost certainly need to be in New York due to the size and importance of the New York

market, the job and employment situations are a net benefit for the Transaction.

Indeed, many of the commenters that represent important business interests and whose

focus is on employment and economic growth have reviewed the Transaction and concluded that

these approaches of returning overseas jobs and in-sourcing more functions will positively

impact the local economy.53

51 Retail Council Comments at 1.52 Staff Comments at 44-45.53 CenterState Corporation for Economic Opportunity (“CenterState Comments”) at 1 (Jul. 27, 2015) (“weare hopeful for the potential for new jobs in our area as Charter fulfills its promise to restore more jobs tothe U.S., including in New York State); ACLP Comments at 3; Retail Council Comments at 1.

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E. Infrastructure and Investment Benefits

Commenters recognize that the “merged entity . . . will have greater capacity to invest in

advanced networks and services across New York.”54 In connection with the Transaction, New

Charter has stated that it will build out one-million line extensions to unserved homes in its

franchise areas within four years of the Transaction closing. In addition, the company has

committed to spend an additional $2.5 billion in the build-out of networks into commercial areas

within its national footprint beyond where Charter, TWC and BHN currently operate. In

addition New Charter is committed to finding constructive ways to address rural system

expansion. Charter has already participated in the State’s ConnectNY program in Jay, New York

and New Charter would be willing to consider participation in future programs that help spur

rural expansion. The Transaction therefore presents a real opportunity to benefit New Yorkers

tangibly by extending digital video and broadband network facilities into new areas of the State

that previously lacked access.

New Charter is also committed to expanding availability of mobile data service through

the addition of more than 300,000 out-of-home WiFi access points across its footprint, including

in New York, building upon TWC’s deployment of WiFi hotspots in the State.

1. Expansion of New Charter Network

New Charter’s network expansion efforts will build on successful experiences of TWC

and Charter in New York. Former Town of Jay Supervisor and Essex County Board of

Supervisors’ Chairman Randall Douglas describes in his comments a successful collaboration

between the Town, Essex County Officials and Governor Cuomo’s Connect NY program “to

bring high speed internet and cable television services to much needed and underserved areas in

54 ACLP Comments at 2.

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the Town of Jay and neighboring Essex County towns where physical construction is currently

underway.”55 Upon the completion of this line extension project at the end of 2015, Charter will

serve an additional 420 New York households. The Supervisor of the Town of Poestenkill, a

community currently served by TWC, expresses support for the Transaction based in part on

New Charter’s commitment to infrastructure expansion and the Town’s interest in expanding

service to the eastern portion of the Town.56

New Charter’s broader commitment to extend its network to unserved residences and

commercial locations offers a substantial public benefit to businesses and residents in New York,

as reflected in the comments filed in this docket. The Retail Council of New York State

emphasizes that high-speed Internet service “is no longer a luxury, but a crucial component to

remaining competitive in the 21st Century.”57 Another commenter notes the importance of

Charter’s commitment to line extensions and commercial area network buildouts because

“increased broadband infrastructure enables families and business to connect to the Internet and

keep up in our 21st century society.”58 Several Chambers of Commerce representing a wide

range of business interests throughout New York identify New Charter’s commitment to buildout

service to residential and commercial areas as critical to “provid[ing] reliable internet service to

rural communities and other underserved areas” and “increas[ing] competition in New York”

through “lower business costs for companies.”59

55 Comments of Randall T. Douglas (“Douglas Comments”) at 1 (Aug. 28, 2015).56 Comments of Town of Poestenkill Supervisor Dominic J. Jacangelo at 1 (Sep. 23, 2015). This letter isaddressed to FCC Chairman Tom Wheeler but was posted in the Commission’s transaction docket.57 Retail Council Comments at 1.58 Comments of the Salvadori Center (“Salvadori Comments”) at 1 (Sep. 14, 2014).59 Comments of the Niagara USA Chamber of Commerce (“Niagara USA Comments”) at 1 (Aug, 3,2015); see also Adirondack Chamber Comments at 1 (describing network buildout commitments as “vitalto our continued economic growth in the region”); Capital Chamber Comments at 1.

23

While Petitioners do not know today exactly how many of those line extensions or

commercial build out projects will be constructed in New York, upon closing the Transaction

New Charter is committed to evaluating each of the New York systems to determine where they

are appropriate. But, given the size and scope of the New York service area, investment will

occur in New York and therefore, notwithstanding a lack of statewide specificity, New Charter’s

commitment will present a net positive benefit for New York.

Petitioners also believe strongly that areas in need of build out and/or upgrades are far

better positioned to get services and enhancement as a result of the Transaction. By spreading

fixed-cost investments over a larger customer base, New Charter will compete more effectively

with the ILECs both in New York and throughout the country, which could lead to increased and

faster investment in the future.

2. Increased Mobile Broadband Capability Through WiFi HotspotDeployment

New Charter is committed to expanding mobile broadband options. TWC has already

deployed WiFi access points in the State, and New Charter will deploy at least 300,000

additional out-of-home WiFi access points nationwide within four years of the Transaction

closing. While Charter does not know currently how many of these access points will be in New

York, it can say that New Charter will include many New York locations and that it will evaluate

the needs of each local system as it develops its deployment strategy. New Charter also has no

plans to change TWC’s current free WiFi service offers to New York City residents who are not

customers.

Increased availability of public WiFi access points confers significant benefits on New

York residents. As Staff recognizes, “deployment of new WiFi hotspots will provide . . . users

24

greater mobility and ease of access to their video, voice and data services away from home.”60

In addition, increased availability of WiFi hotspots will increase wireless competition by

allowing New Charter customers to reduce their reliance on costly data plans with their wireless

providers. Expansion of WiFi outside of the State also benefits existing TWC customers in New

York as they travel to cities around the country and see more WiFi deployment and expansion as

a result of New Charter’s commitment; it will also benefit Charter’s existing customers in New

York that currently do not have access to cable WiFi services either within their own

communities or in other parts of New York State or the nation.

In short, the four-year commitment to continue aggressive expansion is a tangible

positive benefit that will provide New Yorkers access to more WiFi hotspots as a result of the

Transaction.

F. Community Involvement Benefits

New Charter will recognize the vital importance of promoting diversity and inclusion

strongly rooted in the communities it serves. New Charter intends to incorporate and build upon

TWC’s partnerships with educational institutions and nonprofits – including Women in Cable

Telecommunications, the National Association for Multi-Ethnicity in Communications, and the

Betsy Magness Leadership Institute – and more recently with the veterans and disability

communities, to recruit and retain a diverse workforce. New Charter also will include a cross-

cultural mentoring program, which provides employees significant opportunities to build skills

and knowledge and to achieve professional goals.

New Charter is also committed to increasing engagement with minority-, women-,

veteran-, and disabled-owned suppliers and businesses by engaging in supplier diversity events,

60 Staff Comments at 30.

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outreach to minority business organizations, and free webinars. Commenters have strongly

supported the Transaction because of Charter’s demonstrated commitment to inclusive practices.

The New York City Hispanic Chamber of Commerce, which testified in favor of approval of the

Transaction, has filed comments at the FCC applauding New Charter’s plans to retain and

expand TWC’s diversity and inclusion initiatives.61 The Amherst Chamber of Commerce states

that New Charter would be a “leading example” for other corporations because of its adoption of

TWC’s “diversity and inclusion programs that include hiring, workforce, and supply chain

development.”62 An Upstate New York leadership and economic development organization

notes that “[d]iversity and inclusion in hiring and purchasing will be important initiatives to

benefit our minority-owned businesses and their employers.”63 The Dominican Women’s

Development Center explains that by retaining TWC’s diversity initiatives, New Charter “will

ensure that more women and minorities are given opportunities not only at New Charter, but in

the broader cable/internet supply chain.”64

While Common Cause asserts that the Transaction will not help “achieve diversity goals”

beyond what the individual companies would have obtained on their own,65 Petitioners disagree.

New Charter will be able to implement more quickly, and across a broader geographic scale,

diversity programs with a proven track record that might otherwise take years to develop and

refine. The Digital Divide Partnership notes that “New Charter’s embrace of new diversity

61 Hispanic Chamber Comments at 1.62 Amherst Chamber Comments at 1 [Add Black Chamber or Hispanic Chamber].63 CenterState Comments at 1.64 Comments of the Dominican Women’s Development Center at 1 (Sep. 21, 2015).65 Common Cause Comments at 2.

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opportunities in New York City sends the message that it understands how a corporate citizen

can accrue value for its community-based efforts.”66

In addition to its diversity initiatives, New Charter strongly believes in being a

responsible corporate citizen, as shown by its “Charter our Community” program, which ensures

critical home repairs, accessibility modifications, and energy-efficient upgrades in low-income

communities. The Niagara USA Chamber of Commerce correctly notes that New Charter’s

“commitment to community service” – including Charter our Community – shows that the

company “is addressing the needs of the communities it seeks to represent.”67 For example, a

consortium that offers science camps for urban youths strongly supports the Transaction because

“New Charter may well be able to expand on each of the three company’s commitments to

community service, positively impacting ours and many other local communities.”68 These

sentiments were echoed by Girls Inc., which believes that “New Charter would contribute new

benefits to our organization and our community through an expanded national reach and a

renewed commitment to local programs.”69

Significant public benefits will inure to New Yorkers as a result of New Charter’s nation-

wide diversity and charitable programs, and these benefits strongly militate in favor of

concluding that the Transaction is in the public interest.70

66 Testimony of Digital Divide Partnership at 2 ; see also De Graff Comments at 1 (stating that “thecreation of New Charter” will “present an opportunity to encourage inclusion through ongoingcommunity partnerships and on a community advisory level”).67 Niagara USA Comments at 1.68 Black Rock Forest Comments at 1.69 Girls, Inc. Comments at 1; See also Salvadori Comments at 1 (“The merger between CharterCommunications, Time Warner Cable and Bright House Networks would be very beneficial for ourcommunity.”).70 These diversity and charitable initiatives are in addition to New Charter’s expansion of BHN’s low-income broadband option (Connect2Compete) and New Charter’s commitment to continuing TWC’s low-cost $14.99 internet plan, which are discussed above in Part I.C.

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II. THE CONCERNS RAISED BY COMMENTERS NEITHER WARRANT DENIALOF THE TRANSACTION NOR REQUIRE THE IMPOSITION OFBURDENSOME CONDITIONS.

A. Infrastructure Deployment and Expansion

1. Line Extensions and Commercial Area Buildout

Staff expresses concerns that Petitioners have not committed to ensuring that operational

savings resulting from the merger will be used to improve cable systems in the state, as opposed

to being allocated to other states or back to shareholders.71 Although supporting New Charter’s

proposals concerning broadband deployment and expansion 72 the Public Utility Law Project of

New York (“PULP”) seeks specific commitments to build to particular areas in New York

State.73 Staff and PULP both suggest that Petitioners should develop a strategic implementation

plan to build out the all-digital network to unserved and underserved franchise areas in New

York.74

These proposed conditions overlook the fact that the scale of the Transaction, as well as

the commitments New Charter already has made to broadband infrastructure deployment, will

spur new investment. As ACLP notes, as a result of the Transaction, “New Charter will be able

to leverage its larger national footprint in ways that will allow it to channel additional investment

into New York, which will be one of its largest service areas.”75 Staff’s concern that New

Charter has not made “concrete commitments”76 is misplaced in light of New Charter’s express

pledge to build out one-million line extensions to reach unserved homes, spend $2.5 billion on

71 Staff Comments at 47-48.72 Comments of the Public Utility Law Project of New York (“PULP Comments”) at 9 (Sep. 16, 2015).73 PULP Comments at 9.74 Staff Comments at 50-51; PULP Comments at 9.75 ACLP Comments at 2.76 Staff Comments at 48.

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network buildout in commercial areas throughout its franchise areas, and deploy 300,000 new

WiFi hotspots across its service area, including in New York State. Further, Charter’s pledge to

upgrade all New York systems to all-digital carries with it a specific investment commitment that

provides a concrete timetable for delivering advanced services and capabilities to Upstate New

York residents.77

Imposing a strict “implementation plan” for the deployment of broadband in New York

would be counterproductive,78 unnecessarily constraining Charter’s business judgment and

potentially diminishing the company’s flexibility to work with communities on partnership

programs, such as the Town of Jay line extension project described above. In addition, requiring

New Charter to commit to a specific plan just 60 days after the Transaction closes would take

away the company’s flexibility to deploy investment capital where it would be of most benefit to

New York residents based upon a complete understanding of TWC’s systems and operations –

which is not fully possible until after closing and integration of the cable systems. Further, such

a condition would constrain New Charter’s ability to adapt its plans to meet changing needs in

New York as new technologies, grant programs, or other opportunities become available in the

State.

One commenter, the Lexington Broadband Initiative (“LBI”) even goes further,

requesting that the Commission withhold approval of the Transaction unless Petitioners commit

“to build down to 10-12 residents averaged over the covered area of a given unserved or

underserved community.”79 Such a buildout requirement would go well beyond the buildout

77While Staff asserts that upgrades to all-digital “come with potentially higher video price-tags,” Staff

Comments at 28, it offers no evidence to support this assertion.78 Id. at 51.79 Comments of the Lexington Broadband Initiative (“LBI Comments”) at 1 (Sep. 10, 2015).

29

requirements and density thresholds in the Commission’s cable rules,80 as well as the

requirements of Petitioners’ cable franchises. The Commission should not circumvent municipal

authority to negotiate buildout commitments in franchises, or its own rulemaking process, by

adopting a buildout requirement that exceeds existing requirements in the State.

2. System Upgrades to Increase Broadband Speeds

Staff suggests that the Commission consider a requirement that New Charter deploy

network infrastructure capable of 100 Mbps within 30 months, 300 Mbps within 42 months, and

1 Gbps service in the five largest TWC markets by 2020.81 Setting aside any arguments

concerning whether the Commission has the legal authority to impose requirements with respect

to the speed or technology used by a cable or broadband provider to offer service,82 New Charter

believes there is no reason for the Commission to condition approval of the Transaction on these

types of requirements. Charter is already committing to make the investment and take the steps

necessary to raise TWC’s base broadband speeds to 60 Mbps, which is faster than TWC’s

current highest speed in Upstate markets. In addition, competitive forces, such as broadband

services offered by ILECs and wireless providers, as well as industry developments, such as the

DOCSIS 3.1 standard identified by Staff,83 will ensure that New Charter will remain on the

cutting edge of technological innovation in order to deliver high-quality services to its New York

customers. This is evidenced by the fact that Charter already offers 100 Mbps service in its all-

digital areas, and has committed to convert TWC systems to all-digital within 30 months so those

80 16 NYCRR § 895.5.81 Staff Comments at 56.82 Federal law preempts “any provision of law of any State, political subdivision, or agency thereof, orfranchising authority . . . which is inconsistent with” the Federal Cable Act. 47 U.S.C. § 556(c). Further,Section 624(e) of the Cable Act establishes that “[n]o State or franchising authority may prohibit,condition, or restrict a cable system’s use of any type of subscriber equipment or any transmissiontechnology.” 47 U.S.C. § 544(e).83 Staff Comments at 56.

30

areas may also enjoy higher speed service. Given Staff’s acknowledgement that Petitioners’

plans already meet Governor Cuomo’s broadband goals,84 there is no reason for the Commission

to take the unprecedented step of conditioning its approval of this Transaction on the provision

of certain minimum broadband speeds.

3. The Chatham System

Petitioners also acknowledge Staff’s request that New Charter develop a plan to upgrade

the Chatham system.85 Petitioners have explained to Staff previously that the Chatham system is

part of a small number of Charter systems – representing fewer than 1% of Charter’s overall

subscribers – where technical challenges have hampered Charter’s objective of converting those

systems to all-digital.86 If the Transaction is approved, New Charter would be able to utilize

TWC’s system resources near the Chatham area to facilitate the task of upgrading and converting

the Chatham system to all-digital.

In comments, Staff requests that Charter commit to upgrade the Chatham system within

30 months of closing. 87 Charter is willing to commit to an even faster timetable and complete

the upgrade of the Chatham system within 24 months of closing, subject to the timely receipt of

all necessary permits and prompt completion of pole attachment make ready work by utility

owners in the area.88 Charter appreciates the Staff’s offer and willingness to help address any

permit or make-ready issues that would impact the timing.

84 Id. at 5485 Id. at 51.86 Petitioners’ Responses to Discovery Requests DPS-8 and -13.87 Staff Comments at 50.88 Petitioners appreciate Staff’s awareness that there may be some “operational issues” associated withthis make ready work, and will call upon Staff for assistance if necessary. Staff Comments at 50.

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Upon completion of this upgrade, New Charter will be able to offer Chatham system

customers the same suite of services offered to the more than 99% of Charter customers who are

currently served by all-digital systems. As Staff itself recognizes, this commitment will

“substantially improve wireline telecommunications services to thousands of residents,

businesses, and community anchor institutions in Columbia County.89

4. WiFi Deployment

Staff proposes requiring New Charter to deploy a number of WiFi hotspots equal to the

proportion of broadband subscribers in New York State compared to the nationwide number of

New Charter broadband subscribers.90 As previously stated, New Charter is committed to

deploy, within four years of Transaction closing, more than 300,000 out-of-home WiFi access

points nationwide. This will include WiFi hotspots in New York State. However, an

unprecedented requirement such as a rigid requirement to deploy a specific number of hotspots

in any one particular place is not practical, as it removes New Charter’s ability to make decisions

as to how to best place WiFi access points to maximize use and availability and is unreasonable

until New Charter has an opportunity to fully review current WiFi deployment and integrate the

TWC systems into the larger enterprise. Given the sheer size and scope of New Charter’s

footprint in the New York market, a number of these new access points will be located in the

State, thereby expanding WiFi access in the State beyond what would have existed absent the

Transaction. 91

89 Id. at 50.90 Id. at 31.91 Staff’s suggests that the current ability of TWC customers to “request a hotspot,” See Staff Commentsat 31, is somehow on par with Charter’s specific commitment upon closing of the Transaction to deploy2.5 million more WiFi access points, but the latter represents a concrete pledge to invest and deploy,while the former offers no guarantee that any access point will actually be constructed.

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Petitioners also acknowledge the City of New York’s suggestions concerning WiFi

hotspots in the City, which includes expanding access to WiFi hotspots for participants in the

low-cost broadband program and increasing speeds.92 New Charter will continue to support

TWC’s current free offerings to non-customers in the City and maintain WiFi hotspots deployed

by TWC in New York City parks. It will also evaluate suggestions as it further develops its

plans for WiFi deployment.

B. Broadband Affordability and Offerings for Low- and Middle-IncomeCustomers

Some commenters express concerns about the potential impact of the Transaction on

broadband affordability in New York, suggesting that existing affordable options for TWC

customers might be discontinued or that more options for low-income should be available.

These concerns are misplaced. Subscribers that currently receive TWC’s $14.99 will continue

to be able to do so after the transaction, and New Charter will make available a robust new

offering specifically geared for low-income customers. In addition, upon converting the Upstate

TWC systems to all-digital, Charter will be offering TWC subscribers significantly faster base

broadband speeds at rates that are lower than what they currently pay.

Staff acknowledges Charter’s base broadband speeds are faster than TWC’s, while also

noting that the rates for Charter’s standard broadband offering are higher than TWC’s $14.99

Everyday Low Price service.93 A few individual commenters also express their desire to remain

in this $14.99 package.94 But the $14.99 offering (which is actually $22.99 for customers that

92 NYC Comments at 6.93 Staff Comments at 43.94 Comments of Philip Zenowich at 1 (Aug. 13, 2015); Comments of Michael Hawkins at 1 (Aug. 10,2015). Petitioners note that the FCC recently made clear that States cannot regulate broadband rates, andthus any condition that mandates a particular price for a broadband offering would be impermissibleProtecting and Promoting the Open Internet, Report and Order on Remand, Declaratory Ruling, and

33

lease a modem) only provides speeds of 2-3 Mbps, approximately 20-30 times slower than

Charter’s base broadband speed. Notwithstanding these limitations, New Charter does intend to

allow existing TWC customers that subscribe to the $14.99 offering to continue to receive it.

Staff recognizes that New Charter’s proposed low-cost broadband offering is “a positive

program to introduce broadband service” to low income households, while also contending that

the program’s enrollment eligibility criteria should be expanded.95 New Charter has already said

that the enrollment eligibility criteria for the program will be expanded, and the speeds offered

through the program will be significantly faster than those available via the TWC Everyday Low

Price offering (without separate, additional modem fees). As Petitioners develop more details of

the program, they will share them with Staff and the Commission. Further, Charter agrees with

staff that formation of a “working group of interested stakeholders to develop outreach and other

strategies to improve Lifeline adoption rates and bridge the digital divide in New York” would

be a constructive undertaking, and New Charter would be willing to participate in such an

initiative.96..

The New Charter low-income proposal is voluntary97 and provides a substantial new

benefit not being offered by TWC and Charter in New York currently.98 As ACLP notes, “the

merging companies have committed to creating a robust low-income broadband offering” that

Order, GN Docket No. 14-28, at ¶ 433 (rel. Mar. 12, 2015) (“should a state elect to . . . regulate the ratesof broadband Internet access service through tariffs or otherwise, we expect that we would preempt suchstate regulation as in conflict with our regulations”).95 Staff Comments at 29, 51-52; see also NYC Comments at 2-3 (stating that offering should providedownload speeds sufficient to allow use of multiple devices at the same time).96 Id. at 52.97 Id. at 29.98 Common Cause suggests that New Charter’s low income broadband program is not “merger-specific”and presumably should be discounted as a public interest benefit on this basis. Common CauseComments at 4. As the program is currently offered in BHN’s territories, and Petitioners’ intention tooffer the program is tied to the completion of the Transaction, Common Cause’s assertion is incorrect.

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“will be a substantial boon to millions of consumers who might otherwise remain

unconnected.”99 Girls Inc. describes the Bright House Networks Connect2Compete offering

(which will be the basis for the New Charter program) as a “successful low-income broadband

program . . . to bring online households and students that have long been priced out of the

market.”100

Petitioners also note PULP’s concern as to whether New Charter intends to make

available a stand-alone broadband service “without inclusion of a modem rental fee.”101 New

Charter does intend to make available its 60 Mbps and 100 Mbps services on a standalone basis,

without any additional modem rental fee. Charter also sells standalone video and voice services,

so there is no need to condition approval of the Transaction on the offering of such service.

In short, Charter is taking several significant measures toward addressing broadband

affordability by providing faster base broadband speeds for lower prices to Upstate TWC

customers, instituting a new low-cost broadband program for low-income residents, preserving

current low-price options for existing customers, and making high-speed broadband service

available on a standalone basis.

Lastly, Staff incorrectly suggests that “Charter lacks offerings that may be desirable to

low- and middle-income customers.”102 As demonstrated above, New Charter will be providing

a wide range of affordable broadband options for low- and middle-income customers. Further,

Staff’s own chart purporting to support its assertion demonstrates that Charter’s prices for voice

99 ACLP Comments at 3.100 Girls Inc. Comments at 1.101 PULP Comments at 10.102 Staff Comments at 41.

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service are significantly lower than TWC’s.103 In addition, Staff concedes that the video prices

paid by Charter and TWC are “comparable,” without offering any guidance regarding the

composition of the packages being compared.104 This is significant because the overwhelming

majority of Charter customers are served by all-digital systems, and are therefore apt to have

access to more HD and VOD programming choices that Upstate New York TWC subscribers.

Moreover, there is no indication that Staff’s comparison takes account of the fact that Charter’s

service offerings come without separate, additional charges such as modem fees and other fees

common in the industry. In short, contrary to Staff’s contention, the record demonstrates that

Charter does offer a wide range of attractive offerings for low- and middle-income consumers.

C. Debt

In its comments, Staff expresses concern about the fact that Charter expects to finance

part of the Transaction with indebtedness of approximately $24 billion, which would lead New

Charter to have a debt/EBITDA ratio105 of approximately 4.5x.106 Staff argues that New Charter

should take action post-Transaction to reduce its leverage and should be required to notify the

PSC if TWC’s or New Charter’s credit ratings fell to “BB/Ba2” or lower.107

Respectfully, Staff’s concerns about the Transaction’s financing are misplaced. As Staff

recognizes, a smaller debt/EBITDA ratio “is more supportive of credit quality than a larger

number,”108 and New Charter’s expected debt/EBITDA ratio of 4.5x is lower than comparable

ratios from a number of MVPDs. For example, at the end of 2014, WOW! had a ratio of 7.1x,

103 Id. at 42.104 Id. at 42.105 EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortizations. Id. at 38. It“measures a company’s ability to pay back or service its debt.” Id.106 Id. at 36-39.107 Id. at 56-58.108 Id. at 38.

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Suddenlink was 5.8x, Cablevision was 5.3x, Mediacom BB was 5.3x, and DISH was 5.1x.109

Thus, New Charter’s leverage is lower than and certainly within normal range for MVPDs.

Additionally, there is no evidence that these other companies’ even-higher ratios have resulted in

“cost cuts,” “limit[ed] capital investment,” or “a decline in general service quality.”110 Further,

post-Transaction, New Charter expects to deleverage at ~0.5x per year through EBITDA and

cash flow growth, as the operating business is expected to be cash flow positive at the day of

close.

Additionally, Charter will have a $3 billion revolving credit facility and anticipates it will

be undrawn at closing to support day-to-day management of the business. Staff expressed

concern that TWC’s $3.5 billion revolving line of credit could “eventually require refinancing if

New Charter’s debt/EBITDA ratio exceeds 5.0x.”111 However, TWC has stated that it will not

need to “utilize[e] its $3.5 billion revolving line of credit as that line of credit will be terminated

upon completion of the Transaction.”112 Thus, there is no concern about New Charter’s leverage

having a negative impact on TWC’s revolving line of credit.

In terms of investment quality and credit ratings, New Charter’s debt situation is quite

reasonable. New Charter’s debt will have an expected interest rate of 5.5%, which is even lower

than the interest on TWC’s current debt portfolio, which Staff praises as being particularly well-

rounded and manageable.113 New Charter’s debt will also be 85% fixed, which substantially

eliminates the risk of rising interest rates. Pro forma New Charter (i.e., combined Charter +

TWC+BHN) projects that by the end of 2015, it will have Adjusted EBITDA of $13.8 billion, a

109 See Petitioner’s Response to Discovery Request DPS-42.110 Staff Comments at 36.111 Id. at 38.112 Petitioners’ Response to Discovery Request DPS-51.113 Petitioners’ Response to Discovery Request DPS-51.

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substantial increase from Charter’s $3.2 billion EBITDA in 2014. Moreover, pro forma New

Charter’s projected ratio of debt to EBITDA of 4.5x represents a reduction from Charter’s

current debt levels. Charter’s Corporate Family Rating (“CFR”) is also expected to increase

upon closing: Moody’s expected to increase the rating from Ba3 to Ba2114; S&P announced a

potential two-notch increase from BB- to BB+115; and Fitch expected an increase of up to two

notches, from BB- to BB+.116 Further, TWC pays a fixed interest rate on its existing debt, and

thus the amount of interest remains set over the life of the debt.117

Finally, New Charter has a built-in incentive to maintain fiscally responsible debt levels –

it will have to answer to investors. New Charter’s incentives and responsibilities to its

shareholders are sufficiently strong to obviate the need for stringent oversight of the

Transaction’s financing by the Commission. Charter’s bond offerings to date issued to raise

proceeds to complete the Transaction have been well received by the market, reflecting that bond

investors share shareholder’s favorable view concerning New Charter’s prospects.

Because New Charter’s debt/EBITDA ratio and interest rates are well within norms for

the industry, and New Charter has every incentive to maintain levels within those norms, there is

no cause for concern that New Charter’s debt will cause “difficulty maintaining the investments

necessary to bring expanded products and provide good service quality” to New Yorkers.118

114 See Moody’s Places Charter’s Ba3 CFR on Review for Upgrade Following TWC MergerAnnouncement, Moody’s Investor’s Service (May 26, 2015).115 S&P Keeps Charter Communications (CHTR) on CreditWatch Positive Amid Time Warner Cable(TWC) Deal, Standard & Poor’s Rating Services (May 26, 2015).116 Charter Remains on Positive Watch on Time Warner Cable Merger, Fitch Ratings (issued May 26,2015).117 Petitioners’ Response to Discovery Request DPS-51.118 Staff Comments at 39.

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Accordingly, there is no need to impose any requirements that New Charter seek to reduce its

leverage or send credit rating reports or plans to the Commission.

D. Customer Service

While finding no instance in which TWC or Charter’s PSC Complaint Rate metric

triggered substantial concern,119 Staff nevertheless proposes that New Charter should be required

to develop a plan to maintain service quality at or below PSC complaint rate thresholds and be

subject to large financial penalties ($5 million, which can be doubled for repeat failures) for

failure to meet this standard.120 New York City asks for New Charter to commit to improving

TWC’s customer service, including providing quarterly progress reports.121

Petitioners acknowledge New Charter’s obligation to meet the Commission’s

comprehensive customer service standards, including the detailed annual customer service

reporting requirements found in Sections 890.90(e) and 890.91(d) of the Commission’s cable

rules.122 Nothing in the record suggests the need to develop plans or to impose reporting

requirements above and beyond the existing Commission rules. Charter operates in thousands of

communities across the country and applies the FCC’s customer service standards as the general

benchmark against which to measure performance across its service areas. Charter routinely

meets or exceeds these metrics without material dispute.

As previously stated over the past three-and-a-half years, Charter has brought back jobs

from overseas call centers and hired thousands of people in customer service and field technician

119 Id. at 40-41 (finding that TWC’s video and TWC’s and Charter’s voice complaint rates fall below theCommission’s established threshold, and that Charter’s video service metrics were “inconclusive” due toCharter’s small customer base).120 Id. at 58-59.121 NYC Comments at 4.122 16 N.Y.C.R.R. §§ 890.90(e), 890.91(d).

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operations in order to enhance its customer service capabilities. Since completing the upgrade of

most of its systems to an all-digital platform in December of 2014, Charter’s average call

answering times have exceeded FCC and Commission requirements.123

Charter operates call centers throughout the United States to ensure customers have 24

hours per day/7 days per week access to customer service representatives, and it looks forward to

incorporating TWC’s operations - including New York call centers - into those operations. The

customer experience is a top priority for Charter and improved customer service personnel

training and service policies are important. Charter is committed to providing top quality

customer care and provides extensive training to all of its field technicians and customer service

personnel to achieve that objective. Charter also maintains a rigorous training program for its

customer care agents. Initial classroom training covers multiple weeks and encompasses a host

of discrete subject matter modules. Classroom training is followed by multiple weeks of

“nesting” - where the customer care agent handles customer calls under the supervision of a

training mentor. Additional training is provided on a weekly basis on both an individual and

team basis. In addition, Charter administers quarterly knowledge assessments.

Because the record lacks evidence to support a conclusion that Charter’s current approach

is inadequate, there is no need for the Commission to impose conditions concerning customer

service plans or additional reporting requirements on New Charter beyond those requirements

already applicable by operation of law.

E. Jobs

Staff states that New Charter should make specific job commitments, including no net

loss of customer-facing jobs for at least two years, job reductions for non-headquartered staff

123 See Petitioners’ Response to Interrogatory Request DPS-16.

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should be no lower than for nationwide job cuts, and a 90-day notice for any closing or

relocation of an in-state call center.124 New York City requests similar commitments for call

centers in the city.125 Common Cause asserts that lower programming costs might somehow lead

to job losses in New York’s entertainment industry, but offers no evidence to support this

contention.126 Respectfully, any employment-related conditions are unnecessary because New

Charter will need TWC employees to continue servicing customers in New York, and also

because Charter has a track record of creating jobs, including on-shoring jobs from overseas.

Staff contends that “New Charter will inevitably have less of a focus on New York” and

thus may seek to “gain operational efficiencies by moving/consolidating customer-facing jobs

and other positions to out-of-state locations.”127 Charter, however, has no intention of having

“less of a focus on New York,” which would be contrary to its business interests and the

company has never represented that the State would be less of a focus after the Transaction.

Charter currently has a very small footprint in New York and will need many TWC employees to

service New Charter’s customers across the State, who will still represent over 10% of New

Charter’s national customer base.128

Further, Charter has demonstrated a steadfast commitment to job growth over the past

three-and-a-half years. As previously stated, since current management took over the company,

Charter has added more than 7,000 jobs. Based on this experience, and taking into account the

size of TWC’s 55,000 employee base, New Charter believes it could create up to 20,000 new

jobs over time through similar commitments and by extending its policy of insourcing jobs back

124 Staff Comments at 59-60.125 NYC Comments at 5.126 Common Cause Comments at 3.127 Staff Comments at 44-45.128 Id. at 45.

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to the United States.129 Charter’s past commitments, and New Charter’s forward looking plans,

refute Common Cause’s claim that, absent the merger, TWC itself might in-source jobs.130 What

TWC theoretically could do on its own (and has not done to date) is substantially different than

what Charter will do as a result of the merger.

New Charter’s commitment to returning jobs from overseas has prompted many New

York-based commenters to support approval of the Transaction. For example, the Rochester

Business Alliance expressed “strong support of the proposed merger” because it will result in a

“return of jobs to the United States and the hiring [of] thousands of new employees for customer

service call centers and field technician operations.”131

As a representative of leading New York City employers, investors and entrepreneurs

notes, New Charter’s investment in broadband infrastructure and building out to businesses will

“generate construction jobs and related downstream employment.”132 Improved home Internet

access and building out line extensions will enable more New Yorkers to work remotely as

well.133

129 See First on CNBC: CNBC Transcript: Charter Communications CEO Tom Rutledge Speaks withCNBC’s David Faber on “Squawk on the Street” Today, http://www.cnbc.com/2015/05/26/first-on-cnbc-cnbc-transcript-charter-communications-ceo-tom-rutledge-speaks-with-cnbcs-david-faber-on-squawk-on-the-street-today.html.130 Common Cause Comments at 2.131 Rochester Business Comments at 1; see also Niagara USA Comments at 1 (“Charter will be returningcall center jobs back to the United States and will continue to create thousands of U.S.-based jobs …”);CenterState Corporation for Economic Opportunity Comments. at 1 (“[W]e are hopeful for the potentialfor new jobs in our area …”); Retail Council Comments at 1 (“By returning call center jobs fromoverseas, it is our understanding that retailers will also experience more streamlined assistance shouldthey need it.”); Buffalo Niagara Partnership Comments at 1 (“New Charter has pledged to return callcenter jobs to the United States and will hire and train thousands of new employees for its customerservice centers and field technician operations, including in New York”).132 Partnership Comments at 1; see also Business Council Comments at 2.133 Partnership Comments at 1.

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Given Charter’s track record and the necessity of TWC employees to continue servicing

New York consumers, there is no need for the PSC to impose rigid hiring requirements on New

Charter.

F. Other Issues

1. Rate Transparency

While acknowledging that the Commission cannot regulate rates, New York City asks the

Commission to request that Charter commit to provide fully accurate rate information and

explain discrepancies between advertised rates and actual charges customers incur.134 In today’s

competitive video and broadband marketplace, providing accurate and timely rate information is

key to winning and retaining customers. Further, New Charter will continue to comply with all

applicable rate notice and rate disclosure requirements applicable to cable service under Federal

and State law, as well as the FCC’s broadband transparency rules. Under these circumstances,

Petitioners submit that no additional requirements concerning rate transparency are necessary.

New Charter is already committed to launching its simple, uniform pricing and packaging

models throughout its expanded footprint including in New York. New Charter’s broadband

offerings will, like Charter’s existing offerings, come without any data caps, usage-based pricing,

or early termination fees, and will include no separate, additional cable modems rental fees.

These measures should minimize concerns that customers will receive unclear or unexplained

charges on their monthly bills. New Charter customers can also expect that their broadband

service will be delivered at advertised speeds. According to data provided by SamKnows, a

contractor retained by the FCC to assist the agency with measuring and testing ISPs

134 NYC Comments at 4.

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performance, customers who subscriber to Charter’s 60 Mbps service offering consistently

receive download and upload speeds that meet or exceed 60 Mbps.135

2. Coordination with First Responders

New York City states that “Charter could make a powerful statement about its

commitment to the public interest by, as other New York City operators already have, formally

agreeing to cooperate with providers during natural disasters and emergencies.”136 Charter

recognizes the importance of coordinating with key government entities to ensure the resiliency

of key communications facilities during emergencies and natural disasters. The company has a

history of working in partnership with government agencies and other communications and

utility providers on resilience measures and network restoration efforts in response to

emergencies and natural disasters. New Charter looks forward to the opportunity to work with

New York City and other key agencies on this critically important issue. In addition, Petitioners

are well aware that WiFi networks can play an important role in helping with responses to

natural disasters like Superstorm Sandy, and the expansion of WiFi networks throughout the

New Charter footprint will help with communications during such events.

3. Commitment to PEG Programming

Both New York City and the City of Mount Vernon express concerns about TWC’s

commitment to public, educational, and governmental (“PEG”) access programming and New

Charter’s commitment to such programming on a going forward basis.137 New Charter is

135 The SamKnows test data for Charter is available on its website athttps://www.charter.com/browse/content/network. As the most recent round of testing was conducted inthe first half of 2014, prior to completion of Charter’s all-digital conversion, it also includes results forCharter’s legacy 15 Mbps and 30 Mbps services. Both of those offerings also consistently performed inaccordance with advertised speeds.136 NYC Comments at 6.137 NYC Comments at 7; Comments of City of Mount Vernon Mayor Ernest D. Davis at 2.

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committed to fulfilling all of the obligations of TWC’s franchises, including those applicable to

PEG access and programming in New York City.

Charter has a long track record of providing and supporting PEG access programming in

the communities it serves, and working effectively with PEG access organizations and local

governments. Notably, Queens Public Television - one of the public access stations operating in

New York City - has indicated that it “welcomes Charter and looks forward to a relationship as

productive as presently exists with [TWC].”138 Public Media Network, an agency representing a

consortium of local franchising authorities in Kalamazoo County, Michigan, has told the FCC

that its “experience with Charter . . . on PEG issues has been decidedly positive” and it has “been

pleased” with Charter’s handling of a number of issues, including channel migrations, transition

to all digital, distribution of PEG programming, and adding PEG programming to Charter’s

channel guide.139

BRIC, the community access organization in Brooklyn, expresses concerns about

Charter’s commitment to PEG Access,140 and asks the Commission to impose certain conditions

on PEG channel placement and quality, as well as on financial support for PEG.141 Such

conditions are not necessary. New Charter has already committed to comply with all obligations

of the current TWC franchise in New York City, including those addressing commitments to

PEG. This includes very detailed funding, channel obligations, and other commitments to all

applicable New York City community access organizations, including BRIC. In addition, the

138 Queens Public Television Comments at 2 (Sep. 21, 2015).139 Comments of Public Media Network, MB Docket No. 15-149 at 1-2 (Jul. 29, 2015). A copy of thesecomments are attached to these Reply Comments. Public Media Network commends Charter for“approach[ing] us proactively and with a willingness to find appropriate solutions” to these challenges.Id.140 Comments of BRIC Community Access Organization (“BRIC Comments) at 2-3 (Sep. 21, 2015).141 BRIC Comments at 6-7.

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Charter-related claims in the Alliance for Community Media (“ACM”) report attached to BRIC’s

comments are inaccurate or misplaced,142 criticizing, for example, changes that were designed to

improve service or standardize channel locations. ACM’s own comments in this proceeding

express concerns that there are “many dark” PEG channels in New York,143 which can be the

result of franchise agreements that allocate an excess of PEG channels in relation to demand for

their use. While asserting generally that TWC has not fulfilled its PEG obligations, ACM does

not offer specifics. Many of the commitments ACM seeks – such as a commitment to create new

PEG channels or to transmit PEG in HD144– are more appropriately addressed in individual

franchise renewal negotiations, rather than in this proceeding.

In Mount Vernon, according to TWC it has met and even exceeded its PEG support

obligations under its franchise, and will continue to engage with the City in discussions on

franchise renewal terms, including PEG support, pending completion of the Transaction. Efforts

to compel Charter to resolve TWC franchise disputes during the pendency of the Transaction are

neither appropriate nor practical, given that TWC operates over 1100 franchises in the State and

retains control of its systems until the Transaction closes. Further, the details of any particular

franchise dispute do not constitute a transaction-specific basis for objecting to the proposed

transfer. Notwithstanding the specifics of the City of Mount Vernon’s issues regarding PEG

access, New Charter is open to working with the City or any other communities that are seeking

franchise renewals, to address its concerns should they persist after the Transaction closes.

142 BRIC Comments at 8-13.143 ACM Comments at 1.144 Id. at 2-3.

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4. Maintaining ETC Eligibility

Comments from the Public Utility Law Project of New York (“PULP”) confirm

Petitioners’ belief that “[u]niversal service is the cornerstone of the United States’ and New

York’s public policy toward basic and advanced telephony.”145 New Charter acknowledges that

one aspect of universal service is the Lifeline service for low- and fixed-income customers. As

Staff has recognized, the petition to the Commission confirms that New Charter has no current

plans to change TWC’s ETC status in New York or to discontinue Lifeline Discounted

Telephone Service (Lifeline).146 In any event, public interest concerns relating to the Lifeline

service need not be addressed in this proceeding, as any changes in TWC’s Lifeline service

would be the focus of a separate proceeding where such changes could be evaluated in their own

right.

Also noteworthy is that Charter supports the FCC’s recently announced proposal to

transition the Lifeline program to support broadband in addition to voice services. Indeed,

Charter supports allowing Lifeline customers to allocate their Lifeline discount to both bundled

and unbundled services, to better allow low-income households to be treated the same way as

other customers in the marketplace for voice and broadband services.147 Charter also supports

the FCC’s proposal to facilitate the ability of companies like Charter to participate in Lifeline by

expanding the universe of providers who could be eligible to receive Lifeline funds in a fiscally

sound and efficient manner.148 This shows New Charter’s commitment to and interest in

participating in the Lifeline program regardless of its ETC status.

145 PULP Comments at 6.146 See Staff Comments at 34.147 Comments of Charter Communications, Inc., WB Docket No. 11-42, et. al. at 3-4 (Aug. 31, 2015).148 Id. at 5.

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III. THE TRANSFER SHOULD BE APPROVED BECAUSE PETITIONERS HAVESHOWN THE TRANSACTION IS IN THE PUBLIC INTEREST

The Commission should approve the Transaction because it satisfies the public interest

test traditionally applied to similar types of transactions. Under New York law, the

Commission’s authority to review telephone corporation and cable television transfers is limited

to a determination as to whether the transfer of the telephone corporation and/or cable television

system is “in the public interest.” 149

A. Review of Telephone Company Transfers Under PSL Section 100

In the context of telephony transactions under PSL Section 100, the Commission has not

imported the heightened “net benefits test” of PSL § 70—which pertains to mergers for electric

and gas companies. Nor has Staff suggested that the Commission should apply Section 70’s

requirements to approval of telephony mergers under Sections 100 and 101.150 In the Verizon-

MCI merger, for example, the Commission conducted a limited inquiry, even though the

transaction involved the acquisition by New York State’s most dominant ILEC of one of the

State’s largest competitive providers.151 There, the Commission did not impose synergy-sharing

or investment-related requirements derived from electric and gas utility mergers; instead, the

limited conditions imposed by the Commission related primarily to the merged company’s

provision of wholesale services.152

The Commission’s and Staff’s refusal to apply Section 70 to telephony transactions is

primarily a result of the fact that telephone companies operate in a vastly more competitive

149 See N.Y. PSL §§ 99(2), 100(3), 101, 222(3)(b).150 See Staff Comments at 13-15.151 Case 05-C-0237, Joint Petition of Verizon Communications Inc. and MCI, Inc., Order AssertingJurisdiction and Approving Merger Subject to Conditions, at 56 (Nov. 22, 2005) (“Verizon-MCI Order”).152 See generally Verizon-MCI Order.

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market than do gas and electric companies, and thus mergers in the telephony context are

significantly less likely to have any negative effects on competition.153 The relationship between

market competition and the stringency of the Commission’s review explains why New York’s

regulatory framework has consistently distinguished competitive providers – like Charter and

TWC – from ILECs, subjecting competitors to lighter regulatory oversight,154 which Petitioners

in this case easily satisfy. Indeed, the Commission itself has recognized that a company

“providing telecommunications services on a competitive basis does not require the degree of

regulatory scrutiny that applies to monopoly public utilities.”155

B. Review of Cable Company Transfers Under Section 222

In the context of cable transactions, the Commission’s public interest inquiry historically

has focused on the degree to which a proposed transaction will ensure continued provision of

service to customers without any negative impact or changes outside the ordinary course of

business, as well as whether the transferee possess the requisite qualifications to operate the

systems.156 The record in this proceeding shows that New Charter will possess the legal,

153 See Case 14-M-0183, Joint Petition of Time Warner Cable Inc. and Comcast Corp. for Approval of aHolding Company Level Transfer of Control, Comments of the N.Y. State Dep’t of Public Service Staff at40 n.53 (Aug. 8, 2014) (“[S]ufficient competitive alternatives exist in much of New York’s residentialtelephone market.”).154 See Case 11-C-0425, Joint Petition of PAETEC Holding Corp. et al., Order Authorizing Transfer, , at13 (Nov. 11, 2011) (“PAETEC-Windstream Order”); Case 05-C-0616, Proceeding on Motion of theCommission to Examine Issues Related to the Transition to Intermodal Competition in the Provision ofTelecommunications Services, Statement of Policy On Further Steps Toward Competition In theIntermodal Telecommunications Market And Order Allowing Rate Filings, at 36-37 (April 11, 2006)(“PSC Intermodal Competition Order”).155 Paetec-Windstream Order at 13 (emphasis added).156 Case 12-V-0368 , See e.g. Joint Petition of Atlantic Broadband (Penn) LLC and Acquisitions CogecoCable II Inc. for Approval of Transfer of Control of Cable Television System Franchises, Certificates, andFacilities in Cattaraugus County, New York, Pursuant to Public Service Law § 222, Order ApprovingTransfer at 3 (Nov. 30, 2012) (“Atlantic will continue to provide service to existing customers withoutchange in rates, terms, or conditions outside of the ordinary course of business. Atlantic will continue tobe operated by the same highly experienced, well-qualified management, operational and technicalpersonnel”); Case 05-V-0771, Joint Petition of Time Warner Cable Inc. and Adelphia Communications

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financial and technical ability to operate the TWC cable systems, and that subscribers to those

systems will experience no diminution in services but will instead enjoy a number of

considerable enhancements in terms of services offered and network capabilities.

The amendment to Section 222 did not alter the language of the public interest standard

in Article 11, but did clarify – by shifting the burden – that the petitioner seeking approval of a

proposed transfer must show that the transaction is in the public interest.157 Indeed, the two

cable transfers decided by the Commission in the wake of that amendment did not materially

differ from previous applications of the public interest standard in the context of cable

transactions. In the first decision, involving the transfer of two cable franchises from Haefele

TV to TWC, the Commission found that the proposed transaction met the public interest because

TWC had committed to improving the overall performance of the acquired system, would offer

Corporation for the Approval of the Transfer of Certain Assets, Order Approving Petitions (Nov. 7,2005); Case 05-V-0747, Joint Petition of Adelphia Communications Corporation, Comcast Corporationand Time Warner Cable, Inc. for Approval of the Transfer of Certain Assets, at 4 (Nov. 7, 2005) (Notingin connection with approval of the transaction, petitioners’ contention that “the transaction will not haveany harmful impact on the operation or the management of the cable systems, or any impairment of thefinancial, technical or other capabilities of these systems to provide services to the public and will complywith all applicable service and operational commitments”); Case 07-V-0525, Petition of Time WarnerEntertainment - Advance/Newhouse Partnership d/b/a Time Warner Cable to Purchase the Cable Systemof D.W.S. Construction Company, Inc. Serving the Town of Waverly, Located in Franklin County, at 1-2(Oct. 10, 2007) (Noting in connection with approval of the transaction petitioner’s contention that thetransaction will not have a negative impact on the operation or management of the cable system, will notimpair the financial, technical or other capabilities of this system to provide service to the public, and willcomply with all applicable service and operational commitments. The Company also states that itpossesses the financial capability to operate the system, to make all appropriate system investments, andto comply with all applicable federal, state and local system requirements”); Case 04-V-0860, Petition ofTime Warner Entertainment Advance/Newhouse Partnership (TWEAN) to Acquire Franchise Titles andOwnership Interests Held by its Subsidiary CAT Holdings, LLC in its System Serving ten Watertown, NewYork Area Municipalities, Order Approving Transfer, at 2-3 (May 5, 2004); Case 04-V-0465, Petition ofBath Television & Service Co., Inc. for Approval of the Transfer of Assets with Time WarnerEntertainment-Advance/Newhouse Partnership (TWEAN) Involving the Transfer of the Village of Bath,Town of Bath and the Village of Savona Cable Television Franchises to Time Warner Entertainment-Advance/Newhouse Partnership pursuant to Public Service Law § 222, Order Approving Transfer, at 2-3(Dec. 7, 2004).157 Compare NY PSL § 222(3)(b)[effective until April 1, 2017] and NY PSL § 222(3)[effective April 1,2017].

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access to broader programming, and had a proven track record as “an experienced provider of

advanced cable, Internet access and telecommunications services.”158 The Commission also

noted that the “proposed transfer is expected to result in the continuation of the existing

operations, terms, and conditions in place for the provision of cable service” by the companies

being transferred.159 Earlier this year, the Commission approved a second cable transfer under

amended Section 222, applying a similar analysis.160

The instant Transaction clearly satisfies the post-amendment applications of the public

interest test in the Time Warner Cable/Haefele and Adams CATV/ Oquaga Lake approval orders.

The record clearly shows that Charter possesses the requisite legal, financial and technical

capabilities to operate the systems.161 Further, Charter has committed to improving the overall

performance of the Time Warner Cable systems by accelerating the upgrade to all-digital,

offering enhanced broadband speeds and new technical features and capabilities such the

Spectrum Guide, WorldBox, and an improved mobile TV app. Charter also will be making new

infrastructure investments that will expand and enhance network performance, and taking steps

to improve customer service. Charter’s track record in boosting the performance and capabilities

of its systems in connection with the company’s transition to all-digital across nearly its entire

footprint highlights its status as “an experienced provider of advanced cable, Internet access and

158 Case 14-V-0023, Application of Time Warner Cable Northeast LLC in Connection with the Acquisitionof Certain Cable Television Facilities and Franchises in the Towns of Greene and Smithville fromHaefele TV, Inc, Order Approving Transfers, at 7-8 (Apr. 29, 2014)(“Time Warner Cable/Haefele”).159 Id.160 Case 15-V-0090, Joint Petition of Adams CATV, Inc. and Oquaga Lake Cable, Inc. for Approval ofTransfer of Control of Cable Television System Franchise, Certificates and Facilities in Broome County,Order Approving Transfer, at 5-6 (May 21, 2015).161 While some commenters argue for additional public interest conditions to be imposed on theTransaction, there is no evidence in the record that casts doubt on Charter’s legal, technical, and financialqualifications to operate the systems.

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telecommunications services, with significant resources.”162 Thus, under the criteria applied by

the Commission in connection with recent reviews of cable transfers following the amendment to

Section 222, this Transaction should be approved.

Staff contends that in amending Section 222 in 2014, the legislature intended to subject

cable television transfers to the “net benefits test” applied “in Commission decisions regarding

utility acquisitions and mergers.”163 Staff, however, cites no language or legislative history of

the amendment to support this view. As noted above, the 2014 amendment did nothing more

than make clear that the applicant seeking approval of a requested transfer held the burden of

showing the transaction at issue was in the public interest. But a mere shift in the burden of

162 Time Warner Cable/Haefele at 6.163 See Staff Comments at 2, 16-17. Staff’s suggestion that Section 706 of the Communications Act, 47U.S.C. § 1302(a) endows it with authority to examine the impact on broadband service of a proposedcable television transfer is without merit. Staff Comments at 12-13. As a threshold matter, the D.C.Circuit’s opinion in Verizon v. Federal Communications Commission, 740 F. 3d 623 (D.C. Cir. 2014), didnot actually rule on whether Section 706 constitutes an affirmative and independent grant of authorityover broadband to State Commissions, because that issue was not at stake in the case. Instead, the Courtsimply held that the reference to State Commissions in Section 706(a) offered no support for Verizon’sclaim that the provision lacked a grant of authority to the FCC. In any event, the court also made clearthat any action taken under Section 706(a) is valid only if it furthers the objectives of that provision. See740 F.3d at 642-49. There is no basis for concluding that reading Section 706(a) to empower 50 differentState Commissions to assert regulatory authority over broadband service in connection with any transferaffecting broadband facilities would further the statute’s goals of encouraging removing barriers toinfrastructure or encouraging deployment of advanced telecommunications capability. To the contrary,such a circumstance would be flatly inconsistent with the Federal scheme of broadband regulationreaffirmed by the FCC in the Open Internet Order adopted in the wake of the D.C. Circuit’s decision.Protecting the Open Internet, 30 FCC Rcd 5601 (2015). In that Order, the FCC reiterated that broadbandInternet access is still a jurisdictionally interstate service for regulatory purposes and that the Commissionwill preempt States that impose “obligations on broadband service that are inconsistent with the carefullytailored regulatory scheme.” Id. at ¶ 431. The D.C. Circuit made clear that whatever authority may beimparted under Section 706(a) may not be exercised in a manner inconsistent with the CommunicationsAct, 740 F.3d at 649, and a State Commission’s assertion of authority over an interstate service would dojust that. Further, the Order notes that, pre-reclassification, Commission precedent consistently treatedbroadband as an interstate service that should be insulated against potentially conflicting State-levelobligations and requirements, and that reclassification of broadband provided no basis for deviating fromthat precedent. Open Internet Order at ¶ 433. The prospect of 50 different State Commissions regulatingbroadband service via transfer authority creates precisely the type of conflicting regulatory patchwork theFCC sought to avoid, and would clearly deviate from Federal policies aimed at establishing acomprehensive national framework for broadband service.

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proof is much different from codifying into Section 222 a utility-based, quantitatively-driven

formula applicable to non-competitive markets.164 In addition, Staff’s position also is belied by

the fact that neither of the two cable transfer decisions issued by the Commission in the wake of

the amendment to Section 222 proposed to apply the utility net benefits test.165

Indeed, there are good reasons why cable companies should be treated differently from

electric and gas utilities under State law, given the different markets in which they

operate. Cable companies operate in a competitive marketplace, subject to competition from

DBS providers, telephone companies offering video, broadband and telephony services, mobile

broadband companies, and a growing array of over-the-top video providers. Unlike utility

markets, merger transactions in competitive and dynamic markets such as communications are

the product of, and subject to, market forces and consumer preferences, and therefore warrant

consideration under a different standard than the utility net benefits test.

Further, State law offers little support for the view that the amendment to Section 222

was designed to adopt the utility net benefits test. To the contrary, a more reasonable reading of

the provision is that it was designed to align Section 222 with the burden of proof in the standard

of review under Section 100 of the Public Service Law, which also places it on the applicant.166

As noted above, that provision has not been held to apply the utility net benefits test, and

164 See supra at 156.165 See supra at text accompanying notes 158-160. Indeed, any decision now to reverse course and departfrom PSC precedent by applying the utility net benefits test to a cable transfer request – particularly afterdeclining to do so in two post-amendment mergers – would face scrutiny under the State AdministrativeProcedure Act. In re Charles A. Field Delivery Serv., 66 N.Y.2d 516, 516-517 (1985) (“A decision of anadministrative agency which neither adheres to its own prior precedent nor indicates its reason forreaching a different result on essentially the same facts is arbitrary and capricious.”); see also Long Is.Light. Co. v. Public Service Com., 137 A.D.2d 205, 212 (3d Dep’t 1988) (annulling the PSC’s decisionbecause it departed from prior precedent without explanation); National Fuel Gas Distribution Corp. v.Public Service Com., 154 A.D.2d 31, 36-37 (3d Dep’t 1990) (finding the PSC’s decision arbitrary andcapricious because it departed from prior policy without a sufficient explanation).166 See NY PSL § 100(3).

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decisions thereunder have expressly taken account of the growth and impact of competition in

communications services.

C. Even If Section 70 Did Address the Appropriate Standard of Review inConnection with the Transaction, The Utility Net Benefits Test Would StillBe Inapposite

Even assuming arguendo that the amendment to Section 222 did incorporate the standard

of review for mergers of electric and gas companies under Section 70, that still would not

support a conclusion that the net benefits test should apply. A significant number of

transactions approved under Section 70 involving competitive electric generators and merchant

transmission companies have been decided under a lighter public interest standard than the net

benefits test applied to utility providers. Since 1991, in its landmark Wallkill ruling,167 the

Commission has analyzed upstream transactions of these companies under a public interest

standard that only requires a showing that a transaction will not result in undue market power.168

The Commission has consistently recognized that these companies participate in competitive

industries and that their investment decisions do not put captive ratepayers at risk.

The characteristics of cable companies are much more closely aligned to those of

competitive electricity generators and merchant transmission owners than to regulated utilities.

As noted above, cable companies, like competitive electricity owners, operate in an intensely

competitive market from wireline and wireless providers as well as online video distributors such

as Netflix and Hulu. Their investment decisions involve private capital and do not put captive

167 Case 91-E-0350, Wallkill Generating Company L.P. – Petition For a Declaratory Ruling That thepublic Service Law is Inapplicable, or That Further Regulation Thereunder is Unnecessary, or in theAlternative, That Light-Handed Regulation be Applied, Declaratory Ruling on Regulatory PoliciesAffecting Wallkill Generating Company and Notice Soliciting Comments (Aug. 21, 1991) (“Wallkill”).168 Case 15-E-0208, Saranac Power Partners – Petition for a Declaratory Ruling Disclaiming the Need toReview a Transfer of a 5% Ownership Interest or in the Alternative, an Order Approving the Transfer,Order Approving a Transfer Transaction and Making Other Findings (Aug. 17, 2015).

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ratepayers at risk. Indeed, like competitive electric providers, they have no captive ratepayers.

As such, the public interest standard that is utilized in Section 222 should be the same public

interest standard in section 70 that is applied to competitive electricity providers. Indeed,

throughout the Wallkill ruling the Commission likened competitive generators to

telecommunications providers, concluding that “lightened regulation, analogous to that imposed

on telecommunications service providers who operate in a competitive environment, is

appropriate.”169 The Commission has consistently reviewed transfers of competitive electricity

providers in this light and applied the Wallkill presumption to upstream transfers that do not

create market power or harm to the interests of captive ratepayers.170 If an analysis is required,

the evaluation is generally limited to issues regarding market power and impacts on captive

ratepayers, without regard to the net public benefits standard recently applied to heavily

regulated gas and electric utilities.171 Here, Staff has already recognized that the Transaction

poses “no detriment” in terms of market power or anti-competitive effects.172

169 Wallkill, at 8170 Case 15-E-0243, Joint Petition of Cross-Sound Cable Company et al for an Order Approving theTransfer, an Order Approving the Financing, and for a Declaratory Ruling Regarding Regulation, OrderApproving a Transfer Transaction and a Financing and Making Other Findings, (August 17, 2015) at 7;Case 15-E-0177, Joint Petition of Competitive Power Ventures Holdings, LLC et al for a DeclaratoryRuling that Public Service Law Section 70 Does Not Apply to Proposed Transactions, Declaratory Rulingon Review of a Transfer Transaction, (May 19, 2015) at 5.171 Where an entity owns a controlling interest in only one facility and is not affiliated with ownership ofany other generation facility in that market, increasing the size of the controlling interest does not affectthe market power analysis. Case 15-E-0208, Saranac Power Partners – Petition for a Declaratory RulingDisclaiming the Need to Review a Transfer of a 5% Ownership Interest or in the Alternative, an OrderApproving the Transfer, Order Approving a Transfer Transaction and Making Other Findings, (Aug. 17,2015).172 DPS Staff Comments at 47 (“Petitioners argue that the transaction will not have a negative impact oncompetition. Staff generally agrees with this assertion. There appears to be little danger of the increasedexercise of market power in this case and therefore no detriment exists in this regard”).

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D. Federal Law Precludes Application of the Utility Net Benefits Test

Federal law also militates against reading the amendment to Section 222 as enacting the

utility “net benefits test.” Article 11 expressly provides that New York cable law should be

construed in accordance with Federal law.173 The Federal Cable Act likewise requires fidelity to

the constraints on State and local authority imposed by Title VI of the Cable Act.174 Under the

FCC’s rules implementing Section 617 of the Cable Act, the scope of transfer review authority is

confined to issues related to a transferee’s financial, legal and technical ability to operate the

cable systems proposed to be transferred.175 Further, the prohibition in Section 621(c) against

subjecting cable operators providing cable service to common carrier or utility regulation,176

precludes reading Section 222 as having adopted the utility benefits test.

173 NY PSL §§ 211, 215.174 47 U.S.C. § 556(c) ( “Any provision of law of any State, political subdivision, or agency thereof, orfranchising authority, or any provision of any franchise granted by such authority, which is inconsistentwith this Act shall be deemed to be preempted and superseded”); Liberty Cablevision of Puerto Rico, Inc.v. Municipality of Caguas, 417 F.3d 216, 221 (1st Cir. 2005)(“Congress has made it unmistakably clearthat the Cable Act will preempt any inconsistent state or local law”); H. Rep. No. 98-934, 98th Cong., 2dSess., (1984) at 19 (The Cable Act “defin[es] and limit[s] the authority that a franchising authority mayexercise through the franchise process”).175 In the Matter of Implementation of Sections 11 and 13 of the Cable Television Consumer Protection &Competition Act of 1992, First Report and Order, 8 FCC Rcd 6828, ¶¶ 85-86 (1993) (Noting that the Form394 transfer form established in response to the enactment of Section 617 was designed to include “theinformation necessary to establish the legal, technical and financial qualifications of the proposedtransferee” and to “ensure that the franchise authorities are provided with sufficient information toevaluate and render prompt decisions with respect to such transfer requests”).176 47 U.S.C. § 541(c).

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E. Even If the Utility Net Benefits Test Were Applicable, the TransactionWould Satisfy It Without Need for Additional Conditions

Finally, even if the amendment to Section 222 could be construed to have adopted the

utility net benefits test, Petitioners have met the test. As a threshold matter, Staff overstates the

amount of synergy savings that should be attributable to customers in several respects. 177

First, Staff fails to compute the net present value of the $402 million in synergy savings it

claims should be reaped by New York subscribers over the first ten years of the Transaction,

thereby overstating the quantitative amount of benefits to be delivered under the test.178 The net

present value computation utilized by Staff in its analysis of the Comcast/Time Warner Cable

transaction reduced the amount of customer synergy savings by nearly 40%, from $530 million

over 10 years to $303 million.179 A comparable computation and reduction should be applied

here, which would bring the overall number to $241 million instead of $402 million.

Second, in capital intensive and technologically dynamic businesses such as cable,

broadband and telephony, it is more reasonable to assume that a substantial portion of synergy

savings will be re-invested in network infrastructure and new technologies – including research

and development associated with such investment – than simply returned to customers or

177 This is especially true when one considers any purportedly “negative” attributes of this Transactionagainst which the benefits are ostensibly netted against under the regulated utility net benefits test. Asthoroughly discussed above and supported by most commenters, the ‘negatives’ enumerated by Staff areactually positives when examined in more detail in light of Charter’s commitments in this case. Even thepost-merger financial issues described by Staff are at worst “neutrals” in this calculation as explainedabove. Thus, when determining what additional conditions are required to balance the negatives of theTransaction, the instant benefits of the merger are more than sufficient to significantly outweigh the deminimis negatives.178 The net present value computation utilized by Staff in its analysis of the Comcast/Time Warner Cabletransaction reduced the amount of customer synergy savings by nearly 40%, from $530 million over 10years to $303 million.179 Joint Petition of Time Warner Cable, Inc. and Comcast Corporation for Approval of a HoldingCompany Level Transfer of Control, Case 14-M-0183, Comments of the New York State Department ofPublic Service Staff, August 8, 2014, at 18.

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shareholders.180 Staff’s calculation of expected net benefits makes no adjustment to account for

this, however, even though such investment inherently inures to the benefit of subscribers.

Third, Staff assumes that synergy savings will be uniformly reaped in each geographic

area served by the merging entities in proportion to that area’s share of the combined company’s

total subscriber base. But each synergy may not have the same effect across the merged entity’s

footprint. Further, other benefits from the merger that are not reflected in cost synergies but

still tangibly affect subscribers – such as the absence of separate, additional modem fees or lower

broadband pricing – have a particularly strong and beneficial impact in areas where Time Warner

Cable subscribers are overrepresented relative to Charter.

But even if the $402 million in synergy savings Staff assumes should flow to New York

subscribers were not overstated, the Transaction clearly provides that amount of benefits – and

more. Indeed, the ability of Time Warner Cable subscribers in New York to obtain faster base

broadband speeds at comparable or lower prices than they currently pay and without separate,

additional modem fees represents tens of millions of dollars in potential value and costs savings

for subscribers per year. Further, Charter already has indicated that New Yorkers will benefit

from Charter’s commitment to invest $2.5 billion nationwide to reach previously unserved

enterprise and business customers, to construct one million additional line extensions across the

merged company’s footprint to reach previously unserved areas, and to deploy 300,000 new out-

of-home WiFi access points across its footprint within four years. New Charter has also

committed to upgrading Charter’s Chatham System on a timetable faster than requested by Staff.

180 See Case 14-C-0370, In re: Study on the State of Telecommunications in New York State, StaffAssessment of Telecommunications Services, at 75, 79 (Jun. 23, 2015) (noting that New Yorkcommunications companies “are reinvesting in their businesses at strong rates” and that “cable televisioncompanies have invested in modern network infrastructure, including head-end equipment, coaxial andfiber optic outside plant cabling; subscriber devices, such as energy efficient set-top boxes; and advancedsoftware to provide consumers with the latest in technology and services”).

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Each of these commitments will provide substantial benefits and considerable value for New

Yorkers. Charter also will be making investments in customer service, making available new

technologies and capabilities that will improve the customer experience such as Spectrum Guide,

WorldBox, and a mobile TV app, enhancing competition in voice telephony and the enterprise

market, and making available a low-cost broadband offering to eligible subscribers. These

undertakings will provide residents with additional value and benefits that “will be important for

the average New Yorker in the new company’s service area.”181 Thus, even under the net

benefits metrics set forth under the problematic standard proposed in Staff’s comments, the

Transaction satisfies the public interest.

181 Business Council Comments at 1.

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CONCLUSION

The record shows that approval of the Transaction will enable New York residents and

businesses to enjoy the benefit of improved technological capabilities and more advanced video

and voice services, faster and more widely available broadband Internet service, enhanced

competition for business services, and Charter’s robust commitment to customer service and

community initiatives. Petitioners respectfully request that the Transaction be approved without

conditions.

Respectfully Submitted,


Counsel for Charter Communications, Inc. andTime Warner Cable Inc.

Luke PlatzerLindsay HarrisonJenner & Block LLP1099 New York Ave., NWWashington, D.C. 20001Phone: (202) 639-6094Email: [email protected]: [email protected] for Charter Communications, Inc.

Christopher HarviePaul AbbottMintz Levin Cohn Ferris

Glovsky & Popeo, P.C.701 Pennsylvania Avenue NW #900Washington, DC 20004(202) 434-7300Email: [email protected]: [email protected]

Counsel for Charter Communications, Inc.

Matthew A. BrillAmanda E. PotterLatham & Watkins LLP555 Eleventh St., NWSuite 1000Washington, DC 20004Phone: (202) 637-2200Email: [email protected]: [email protected]

Counsel for Time Warner Cable Inc.

EXHIBITS TO THE


Letter from Nick Lugo to FCC Chairman Tom Wheeler(“Hispanic Chamber Comments”) FCC MB Docket No. 15-149

Letter from Rev. Jacques Andre DeGraff to FCC Chairman Tom Wheeler(“DeGraff Comments”) FCC MB Docket No. 15-149.

Comments of Public Media Network, MB Docket No. 15-149 (Jul. 29, 2015).

PSC filing by Charter

Documents

new charter

washington dc

broadband benefits

new york ave nwsuite

approval of assignment

video benefits

llp80 state streetalbany

innovative new products